Siemens 2012 Annual Report Download - page 114

1 A. To our Shareholders 21 B. Corporate Governance
22 B. Corporate Governance Report
28 B. Corporate Governance statement pursuant to
Section a of the German Commercial Code
(part of the Combined Management Report)
29 B. Compliance Report
31 B. Compensation Report
(part of the Combined Management Report)
44 B. Takeover-relevant information (pursuant to
Sections  para.  and  para.  of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)

tee and German law does not require that such tasks be per-
formed by the full Supervisory Board. In particular, the Chair-
man’s Committee makes proposals regarding the appointment
and dismissal of Managing Board members, handles contracts
with members of the Managing Board, prepares the determi-
nation of Managing Board compensation and the review of the
Managing Board compensation system to be conducted at the
Supervisory Board’s plenary meetings. In preparing recom-
mendations on the appointment of Managing Board members,
the Chairman’s Committee takes into account a candidate’s
professional qualifications, international experience and lead-
ership qualities, the board’s long-range plans for succession as
well as the board’s diversity and, in particular, the appropriate
consideration of women. The Chairman’s Committee concerns
itself with questions regarding the Company ’s corporate gov-
ernance and prepares the resolution regarding the Declaration
of Conformity with the Code to be approved by the Supervisory
Board. Furthermore, the Chairman’s Committee submits rec-
ommendations to the Supervisory Board regarding the compo-
sition of Supervisory Board committees and decides whether
to approve business transactions with Managing Board mem-
bers and parties related to them.
The Audit Committee comprises the Chairman of the Supervi-
sory Board, two of the Supervisory Board’s shareholder repre-
sentatives and three of the Supervisory Board’s employee rep-
resentatives. According to German law, the Audit Committee
must include at least one independent Supervisory Board
member with knowledge and experience in the application of
accounting principles or the auditing of financial statements.
The Chairman of the Audit Committee, Dr. Hans Michael Gaul,
fulfills these German statutory requirements. The Supervisory
Board has designated Dr. Hans Michael Gaul – in addition to
Dr. Ger hard Cromme – as an “audit committee financial ex-
pert,” as defined by the SOA and the regulations of the SEC.
The Audit Committee oversees the accounting process. It also
prepares the Supervisory Board’s recommendation to the An-
nual Shareholders’ Meeting concerning the election of the in-
dependent auditors and submits the corresponding proposal
to the full Supervisory Board. Furthermore, in addition to the
work performed by the independent auditors, the Audit Com-
mittee discusses the Company ’s financial statements prepared
quarterly, half-yearly and annually by the Managing Board. On
the basis of the independent auditors’ report on the annual fi-
nancial statements, the Audit Committee makes, after its own
review, recommendations to the Supervisory Board regarding
the approval of the Annual Financial Statements of Siemens
AG and the Consolidated Financial Statements of Siemens
worldwide. It concerns itself with the Company ’s risk monitor-
ing system and oversees the effectiveness of the internal con-
trol system as this relates, in particular, to financial reporting,
the risk management system and the internal audit system.
The Internal Audit Department reports regularly to the Audit
Committee. The Audit Committee awards the audit contract to
the independent auditors elected by the Annual Shareholders’
Meeting and monitors the independent audit of the financial
statements – including, in particular, the auditor’s indepen-
dence, professional expertise and services – and performs
other functions assigned to it under the SOA.
The Compliance Committee comprises the Chairman of the
Supervisory Board, two of the Supervisory Board’s shareholder
representatives and three of the Supervisory Board’s employee
representatives. The Compliance Committee concerns itself, in
particular, with the Company ’s adherence to the statutory pro-
visions, official regulations and internal Company policies.
The Nominating Committee, which comprises the Chairman
of the Supervisory Board and two of the Supervisory Board’s
shareholder representatives, is responsible for making recom-
mendations to the Supervisory Board’s shareholder represen-
tatives regarding the shareholder candidates to be proposed for
election to the Supervisory Board by the Annual Shareholders’
Meeting. In preparing these recommendations, the objectives
specified by the Supervisory Board regarding its composition
are to be taken into account as well as the re
quired knowledge,
abilities and experience of the proposed candidates; attention
shall also to be paid to independence, diversity and, in particu-
lar, the appropriate participation of women.
The Mediation Committee, which comprises the Chairman of
the Supervisory Board, the First Deputy Chairman (who is
elected in accordance with the German Codetermination Act),
one of the Supervisory Board’s shareholder representatives
and one of the Supervisory Board’s employee representatives,
submits proposals to the Supervisory Board in the event that
the Supervisory Board cannot reach the two-thirds majority re-
quired for the appointment or dismissal of a Managing Board
member.
The Finance and Investment Committee comprises the
Chairman of the Supervisory Board, three of the Supervisory
Board’s shareholder representatives and four of the Superviso-
ry Board’s employee representatives. Based on the Company ’s
overall strategy, which is the focus of an annual strategy meet-
ing of the Supervisory Board, the Committee prepares the dis-
cussions and resolutions of the Supervisory Board regarding
questions relating to the Company ’s financial situation and
structure as well as its fixed assets and financial investments.
In addition, the Finance and Investment Committee has been
authorized by the Supervisory Board to decide on the approval
of transactions and measures that require Supervisory Board