Siemens 2010 Annual Report Download - page 199

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

rities having the power to elect a majority of the Company ’s
board or otherwise acquiring the power to control the Com-
pany ’s policy-making decisions and the creditworthiness of
the Company is materially weaker than it was immediately
prior to such event. In either situation, ISDA Agreements are
designed such that upon termination all outstanding payment
claims documented under them are to be netted.
COMPENSATION AGREEMENTS WITH MEMBERS
OF THE MANAGING BOARD OR EMPLOYEES IN THE
EVENT OF A TAKEOVER BID
In the event of a change of control – i.e. if one or several share-
holders acting jointly or in concert acquire a majority of the
voting rights in Siemens AG and exercise a controlling influ-
ence, or if Siemens AG becomes a dependent enterprise as a
result of entering into an enterprise contract within the mean-
ing of § of the German Stock Corporation Act, or if Siemens
AG is to be merged into another company – any member of the
Managing Board has the right to terminate the contract of
employment if such change of control results in a substantial
change in position (e.g. due to a change in corporate strategy
or a change in the Managing Board member’s duties and re-
sponsibilities). If this right of termination is exercised, the
Managing Board member will receive a severance payment
which amounts to the base salary that applied for the last
completed fiscal year before contract termination, the associ-
ated target amount for the bonus and the target amount for
the stock awards for the remaining contractual term of office,
at a maximum for a period of twenty-four months. The sever-
ance payment will be reduced by % as a lump-sum allowance
for discounting and for earnings obtained elsewhere whereby
such reduction will apply to the portion of the severance pay-
ment calculated for the period following the first six months of
the remaining contractual term. In addition, non-monetary
benefits are settled by a cash payment equal to % of the sever-
ance payment. The share-based compensation components
awarded remain unaffected. No severance payments are made
if the Managing Board member receives benefits from third
parties on the occasion of, or in connection with, a change of
control. A right of termination does not exist if the change of
control occurs within a period of twelve months prior to a
Managing Board member’s retirement.
Information required pursuant to
§ () and § () no. 
of the German commercial code (HGB)
and explanatory report
The overarching objective of our accounting-related internal
control and risk management system is to ensure that financial
reporting is conducted in a proper manner such that the Con-
solidated Financial Statements and the Management’s discus-
sion and analysis are prepared in accordance with all relevant
regulations.
As described in the section “Report on expected developments
and associated material opportunities and risks – Risk manage-
ment,” our ERM approach is based on the worldwide accepted
“Enterprise Risk Management – Integrated Framework” devel-
oped by the COSO. As one of the objectives of this framework
is reliability of a company ’s financial reporting, it also includes
an accounting-related perspective. Furthermore, the frame-
work connects the ERM process with a company ’s financial
reporting process and is closely integrated into the internal
control system. The accounting-related internal control system
(“control system”) implemented by us is based on “Internal
Control – Integrated Framework,” an internationally recognized
framework also developed by the COSO. The two systems are
complementary as identified risks, for example, may reveal
gaps in the control system that could be closed by implement-
ing new controls and closely monitoring them. Conversely,
monitoring the control system could show that certain risks
are not being controlled as effectively as was originally as-
sumed.
We have standardized our procedures for monitoring the ef-
fectiveness of the control system on a group level, complying
with the requirements of the U.S. Sarbanes-Oxley Act. Under
these procedures, necessary controls are defined, documented
in accordance with uniform standards, and tested regularly.
Our management is responsible for establishing and maintain-
ing adequate internal control over financial reporting. At the
end of each fiscal year, our management performs an evalua-
tion of the effectiveness of its control system, both in design
and operating effectiveness. Our management has concluded
that the Company ’s internal control over financial reporting
was effective as of September , . Nevertheless, there are
inherent limitations in the effectiveness of any control system,
and no system, including one determined to be effective, may
prevent or detect all misstatements.