Siemens 2012 Annual Report Download - page 121

49 C. Combined Management Report 239 E. Additional Information 135 D. Consolidated Financial Statements

The Compensation report outlines the principles underlying
the determination of the total compensation of the members
of the Managing Board of Siemens AG, and sets out the struc-
ture and level of the remuneration of the Managing Board
members. It also describes the policies governing, and levels
of, the compensation paid to Supervisory Board members.
This section is based on the recommendations of the German
Corporate Governance Code and includes disclosures in accor-
dance with the requirements of the German Commercial Code
(HGB), German Accounting Standards (DRS), and International
Financial Reporting Standards (IFRS). The Compensation Report
is an integral part of the Combined Management Report.
.. Remuneration of members
of the Managing Board
...  
The remuneration system for the Managing Board at Siemens
is intended to provide an incentive for successful corporate
management with an emphasis on sustainability. Members of
the Managing Board are expected to make a long-term commit-
ment to and on behalf of the Company, and may benefit from
any sustained increase in the Company’s value. In the interest
of that aim, a substantial portion of their total remuneration
is linked to the performance of Siemens stock. A further aim
is for their remuneration to be commensurate with the
Company’s size and economic position. Exceptional achieve-
ments are to be rewarded adequately, while falling short of
goals is intended to result in an appreciable reduction in remu-
neration. The Managing Board’s compensation is also struc-
tured so as to be attractive in comparison to that of competi-
tors, with a view to attracting outstanding managers to our
Company and keeping them with us for the long term.
The system and levels for the remuneration of the Managing
Board are determined and reviewed regularly by the Supervisory
Board, based on proposals from the Chairman’s Committee.
The Supervisory Board reviews remuneration levels annually
to ensure that they are appropriate. In that process, the eco-
nomic situation and the results of the Company as well as the
performance of the individual Managing Board members are
taken into account. In addition, the Supervisory Board consid-
ers the adequacy of remuneration in comparison with stan-
dard practice at similar companies and with the compensation
structure valid elsewhere in the Company. The remuneration
system that has been used for the Managing Board members
since fiscal 2011 was approved by a large majority at the Annual
Shareholders’ Meeting on January 25, 2011.
.  
     
Non-performance-based components
Performance-based components
Performance-based components with deferred payout
Share Ownership
Guidelines Obligation to hold shares for duration of membership in Managing Board
Long-term compensation
(target parameter: stock price
compared to 5 competitors)
Variability: 0 – 200%
Long-term compensation
(target parameter: Ø earnings
per share)
Variability: 0 – 200%
Bonus (target parameters: revenue
growth (organic), ROCE (adjusted),
free cash flow)
Variability: 0 – 200%
Stock Awards
(forfeitable
grants of stock)
Bonus Awards
(non-forfeitable
grants of stock)
Cash
Base compensation
including other compensation
Stock-based
compensation
Compensation TimingGranted in
Cash
compensation
FY  FY  FY  FY  FY  FY  FY 
Performance period: 3 years, including year of compensation;
subsequent restriction period: 4 years
Performance period: Year of compensa-
tion; subsequent waiting period: 4 years
Restriction period and
period for target
measurement: 4 years
Performance period:
Year of compensation