Siemens 2011 Annual Report Download - page 338

6 A. To our shareholders 51 C. Combined management’s discussion and analysis 23 B. Corporate Governance

In fiscal , the Company granted ,, stock awards;
thereof , awards to members of the Managing Board.
In fiscal , the Company granted ,, stock awards;
thereof , awards to members of the Managing Board.
Details on stock award activity and weighted average grant-
date fair value are summarized in the table below:
Year ended
September , 
Year ended
September , 
Awards
Weighted
average
grant-date
fair value Awards
Weighted
average
grant-date
fair value
Non-vested, be-
ginning of period 4,787,318 €58.06 4,438,303 €57.22
Granted 1,378,185 €77.79 1,361,586 €60.79
Vested (1,558,938) €79.93 (824,694) €57.28
Forfeited/settled (283,984) 1 €56.28 1 (187,877) 1 €61.50 1
Non-vested,
end of period 4,322,581 €56.58 4,787,318 €58.06
1 Consists of , forfeited and , settled awards with weighted average
grant-date fair values of €. and €., respectively, in fiscal  and of
, forfeited and , settled awards with weighted average grant-date fair
values of €. and €., respectively, in fiscal .
Fair value was determined as the market price of Siemens
shares less the present value of dividends expected during
the four year and three year vesting period, respectively, as
stock awards do not carry dividend rights during the vesting
period, which resulted in a weighted average grant-date fair
value of €. and €., respectively, per stock award
granted in fiscal  and . Total fair value of stock awards
granted in fiscal  and  amounted to € million and
€ million, respectively.
Item Forfeited / settled in fiscal , includes rights to stock
awards granted to former Managing Board and Supervisory
Board members, who used their stock award rights to net
their obligations towards the Company, which resulted from
settlement agreements in connection with compliance mat-
ters. For further information see
Note 30 Legal proceedings.
Share-based compensation of
Managing Board members for fiscal 
The Supervisory Board decided to make further adjustments
to the remuneration system for the Managing Board and to fo-
cus even more sharply on sustainable corporate manage-
ment. Revisions to the remuneration system for the Managing
Board, the details of which are set forth in the Compensation
report within the Corporate Governance report included in
the Annual Report for fiscal year , became effective as of
October , .
Variable compensation component (bonus): In fiscal 
agreements were entered into which entitle members of the
Managing Board to Bonus Awards contingent upon the target
attainment. The fair value of these entitlements amounting to
€ million was determined by calculating the present value of
the target amount. Compensation expense related to Bonus
Awards is generally recognized over one-year until they vest.
Beneficiaries will receive one Siemens share without payment
of consideration for each Bonus Award, following an addition-
al waiting period of four years.
Long-term stock-based compensation: In fiscal  agree-
ments were entered into which entitle members of the Man-
aging Board to Stock Awards contingent upon the target at-
tainment. Half of the annual target amount for stock awards
will be linked to the average of published earnings per share
(basic EPS) for the past three fiscal years. The fair value of
these entitlements amounting to € million was determined
by calculating the present value of the target amount. The
other half of the target amount for Stock Awards is based on
the performance of Siemens stock relative to five competitors
(ABB, General Electric, Philips, Rockwell, Schneider). The fair
value of these entitlements amounting to € million was cal-
culated by applying a local volatility model. Inputs to that
model include an expected weighted volatility of Siemens
shares of % and % and a market price of €. and
€. per Siemens share in the first and third quarter, re-
spectively. Expected volatility was determined by reference to
implied volatilities. The model applies a risk-free interest rate
of up to .% and up to .% and an expected dividend yield of
% and .% in the first and third quarter, respectively. Com-
pensation expense related to stock awards is generally recog-
nized over five years until they vest, including a restriction pe-
riod of four years. The total carrying amount for liabilities aris-
ing from stock awards settled in cash amounts to €– as of Sep-
tember , .
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS:
. Share Matching Plan
In fiscal  and , the Company issued a new tranche un-
der the Share Matching Plan. Starting with the tranche issued
in fiscal , senior managers of Siemens AG and participat-