Siemens 2011 Annual Report Download - page 337

153 D. Consolidated Financial Statements 273 E. Additional information
158 D. Consolidated Statements of Changes in Equity
160 D. Notes to Consolidated Financial Statements
266 D. Supervisory Board and Managing Board
154 D. Consolidated Statements of Income
155 D.2 Consolidated Statements of Comprehensive Income
156 D. Consolidated Statements of Financial Position
157 D. Consolidated Statements of Cash Flow

Credit risk is recorded and monitored on an ongoing basis ap-
plying different approaches dependent on the underlying
product. Central systems are used for ongoing monitoring of
counterparty risk. In addition, SFS uses own systems for its fi-
nancing activities. There are also a number of decentralized
tools used for management of individual credit risks within
the operating units. A central IT application processes data
from the operating units together with rating and default in-
formation and calculates an estimate which may be used as a
basis for individual bad debt provisions. In addition to this au-
tomated process, qualitative information is considered, in
particular to incorporate the latest developments.
To increase transparency with regard to credit risk Corporate
Treasury has established the Siemens Credit Warehouse to
which numerous operating units from the Siemens Group
regularly transfer business partner data as a basis for a cen-
tralized rating process. In addition, numerous operating units
transfer their trade receivables with a remaining term up to
one year along with the inherent credit risk to the Siemens
Credit Warehouse, but remain responsible for servicing activi-
ties such as collections and receivables management. The
Siemens Credit Warehouse actively identifies, quantifies and
manages the credit risk in its portfolio, such as by selling or
hedging exposure to specific customers, countries and indus-
tries. In addition to an increased transparency with regard to
credit risk, the Siemens Credit Warehouse may provide Siemens
with an additional source of liquidity and strengthens Siemens’
funding flexibility.
The maximum exposure to credit risk of financial assets, with-
out taking account of any collateral, is represented by their
carrying amount. Credit risks arising from irrevocable loan
commitments are equal to the expected future pay-offs result-
ing from these commitments. Credit risks arising from credit
guarantees are described in
Note 29 Commitments and con-
tingencies. There were no significant concentrations of credit
risk as of September ,  and .
Concerning trade receivables and other receivables, as well as
other loans or receivables included in line item Other finan-
cial assets that are neither impaired nor past due, there were
no indications as of September , , that defaults in pay-
ment obligations will occur. As of September ,  and
, there are no financial instruments that are past due but
not impaired. For further information regarding the concept
for the determination of allowances on receivables see
Note 3 Critical accounting estimates.
 – Share-based payment
Share-based payment awards at Siemens, including Bonus
Awards, Stock Awards, Stock Options, the Share Matching
Program and its underlying plans as well as the Jubilee Share
Program are predominately designed as equity-settled plans
and to a limited extent as cash-settled plans. If participating
Siemens companies cease to be part of the Siemens Group,
they are no longer eligible to participate in future share-based
payment awards at Siemens. In such cases the participating
Siemens companies have the right to settle the share-based
payment awards prematurely. Total pretax expense for share-
based payment recognized in line item Income from continu-
ing operations amounted to € million and € million
in fiscal  and , respectively, and refers primarily to
equity-settled awards, including the Company ’s Base Share
Program.
STOCK AWARDS
The Company grants stock awards and phantom stock as a
means for providing share-based compensation to members
of the Managing Board, members of the senior management
of Siemens AG and its domestic and foreign subsidiaries and
other eligible employees. Stock awards are subject to a four
year vesting period for awards granted up to fiscal  and a
three year vesting period for awards granted thereafter. Upon
expiration of the vesting period, the recipient receives Siemens
shares without payment of consideration. Stock awards are
forfeited if the grantee’s employment with the Company ter-
minates prior to the expiration of the vesting period. During
the vesting period, grantees are not entitled to dividends.
Stock awards may not be transferred, sold, pledged or other-
wise encumbered. Stock awards may be settled in newly is-
sued shares of common stock of Siemens AG, treasury stock
or in cash. The settlement method will be determined by the
Managing Board and the Supervisory Board.
Each fiscal year, the Company decides whether or not to grant
stock awards. Stock awards may be granted only once a year
within thirty days following the date of publication of the
business results for the previous fiscal year. The Supervisory
Board decides annually after the end of each fiscal year how
many stock awards to grant to the Managing Board and the
Managing Board decides annually how many stock awards to
grant to members of the senior management and eligible em-
ployees of the Company.