Siemens 2011 Annual Report Download - page 130

6 A. To our shareholders 23 B. Corporate Governance
25 B. Corporate Governance report
31 B. Corporate Governance statement pursuant to
Section a of the German Commercial Code
(HGB) (part of the combined management’s
discussion and analysis)
33 B. Compliance report
36 B. Compensation report
(part of Notes to
Consolidated Financial Statements)

mined in accordance with the German Codetermination Act,
which requires that one-half of the required  Supervisory
Board members must be elected by our domestic employees.
The Chairman of the Supervisory Board is entitled to cast a de-
ciding vote when the Supervisory Board is unable to reach a
decision in two separate rounds of voting.
B... INDEPENDENCE
In contrast to the NYSE Standards, which require the board of
directors to affirmatively determine the independence of the
individual directors with reference to specific tests of indepen-
dence, German law does not require the Supervisory Board to
make such affirmative findings on an individual basis. Ger-
man law requires that the Audit Committee must include at
least one independent member of the Supervisory Board who
has knowledge and experience in the application of account-
ing principles or the auditing of financial statements. In addi-
tion, the Bylaws for Siemens’ Supervisory Board contain sev-
eral provisions to help ensure the independence of the Super-
visory Board’s advice and supervision. Furthermore, the mem-
bers of the Supervisory and Managing Boards are strictly
independent of one another: a member of one board is legally
prohibited from being concurrently active on the other. Su-
pervisory Board members have independent decision-making
authority and are legally prohibited from following any direc-
tion or instruction. Moreover, Supervisory Board members
may not enter into advisory, service or certain other contracts
with Siemens, unless approved by the Supervisory Board.
B... COMMITTEES
In contrast to the NYSE Standards, which require the creation
of several specified board committees, composed of indepen-
dent directors and operating pursuant to written charters that
set forth their tasks and responsibilities, the Supervisory
Board of Siemens AG has combined the functions of a nomi-
nating, compensation and corporate governance committee
substantially in its Chairman’s Committee and has delegated
part of the remaining functions to the Nominating Commit-
tee. Nevertheless, certain responsibilities, e.g. determination
of the compensation of the members of the Managing Board,
have not been delegated to a committee because German law
requires the Supervisory Board to perform the function in full
session. The Audit Committee, the Chairman’s Committee and
the Compliance Committee have written bylaws – adopted by
the Supervisory Board which address their respective tasks
and responsibilities. The NYSE Standards were taken into con-
sideration in drawing up these bylaws.
The Audit Committee of Siemens AG is subject to the require-
ments of the SOA and the Securities Exchange Act of 1934, as
applicable to a foreign private issuer, and performs – in coop-
eration with the Compliance Committee – functions similar to
those of an audit committee subject to the full NYSE Stan-
dards. Nevertheless, German law precludes certain responsi-
bilities from being delegated to a committee, such as the se-
lection of the independent auditors, who are required by Ger-
man law to be elected at the shareholders’ meeting.
In addition, the Supervisory Board of Siemens AG has a Finance
and Investment Committee and a Mediation Committee, the
latter of which is required by German law. Neither of these
two committees is required under the NYSE Standards.
B... SHAREHOLDER APPROVAL OF EQUITY
COMPENSATION PLANS; STOCK REPURCHASES
The NYSE Standards generally require U.S. domestic compa-
nies listed on the NYSE to obtain shareholder approval of all
equity compensation plans (including stock option plans) and
any material revisions to such plans. Under German law, the
creation of authorized or contingent capital to issue shares
and / or stock options requires the approval by our sharehold-
ers. This includes shareholder approval of the key points of a
stock option plan as part of a decision regarding the creation
of contingent capital or the authorization to repurchase and
use Siemens shares for servicing the stock option plan.
Under German law, share buybacks generally require the prior
authorization by shareholders. Such approval was last given
at our January 25, 2011 Annual Shareholders’ Meeting, and
this matter will generally be voted upon the expiration of
each authorization.