Siemens 2012 Annual Report Download - page 138

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.. Significant agreements which take
effect, alter or terminate upon a change
of control of the Company following a
takeover bid
Siemens AG maintains two lines of credit in an amount of €4
billion and an amount of US$4 billion respectively which pro-
vide its lenders with a right of termination in the event that (1)
Siemens AG becomes a subsidiary of another company or (2) a
person or a group of persons acting in concert acquires effec-
tive control over Siemens AG by being able to exercise decisive
influence over its activities (Art. 3(2) of Council Regulation (EC)
139/2004). In addition, Siemens AG has a bilateral credit line at
its disposal in the amount of €450 million which may be termi-
nated by the lender if major changes in Siemens AG’s corpo-
rate legal situation occur that jeopardize the orderly repay-
ment of the credit.
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documentation
(ISDA Agreements) grant the counterparty a right of termina-
tion upon the occurrence of the following events: (i) the
Company
consolidates with, merges into, or transfers at least
substantially all its assets to a third party and (1) the resulting
entity ’s creditworthiness is materially weaker than the
Compa
ny ’s immediately prior to such event, or (2) the resulting
entity fails to simultaneously assume the Company ’s obliga-
tions under the ISDA Agreement; or (ii) additionally some ISDA
Agreements grant the counterparty a right of termination upon
a third party acquiring the beneficial ownership of equity secu-
rities having the power to elect a majority of the Company ’s
Supervisory Board or otherwise acquiring the power to control
the Company ’s material policy-making decisions and the credit-
worthiness of the Company is materially weaker than it was im-
mediately prior to such event. In either situation, ISDA Agree-
ments are designed such that upon termination all outstanding
payment claims documented under them are to be netted.
In February 2012 Siemens issued bonds with warrant units
with a volume of US$3 billion. In case of a “Change of Control”,
the terms and conditions of these warrants enable their hold-
ers to receive a higher number of Siemens shares in accor-
dance with an adjusted strike price if they exercise their option
rights within a certain period of time after the Change of Con-
trol. This period of time shall end either (1) not less than
30 days and no more than 60 days after publication of the
notice of the issuer regarding the Change of Control, as deter-
mined by the issuer or (2) 30 days after the Change of Control
becomes first publicly known. The strike price adjustment de-
creases depending on the remaining term of the warrants and
is determined in detail in the terms and conditions of the war-
rants. In this context, a Change of Control occurs if a person or
persons acting in concert, respectively, acquires or acquire
control of the Company.
.. Compensation agreements with
members of the Managing Board or
employees in the event of a takeover bid
In the event of a change of control – that is if one or several
shareholders acting jointly or in concert acquire a majority of
the voting rights in Siemens AG and exercise a controlling in-
fluence, or if Siemens AG becomes a dependent enterprise as a
result of entering into an intercompany agreement within the
meaning of Section 291 of the German Stock Corporation Act,
or if Siemens AG is to be merged into another company – any
member of the Managing Board has the right to terminate the
contract of employment if such change of control results in a
substantial change in position (for example due to a change in
corporate strategy or a change in the Managing Board mem-
ber’s duties and responsibilities). If this right of termination is
exercised, the Managing Board member is entitled to a sever-
ance payment in the amount of not more than two years’ com-
pensation. The calculation of the annual compensation in-
cludes not only the base compensation and the target amount
for the bonus, but also the target amount for the Stock Awards.
This calculation will be based on the last contractual year be-
fore the termination of the contract. Additionally, the sever-
ance payments cover non-monetary benefits by paying an
amount of 5% of the compensation or severance total. Further-
more, compensatory or severance payments will be reduced
15% as a lump-sum allowance for discounted values and for in-
come earned elsewhere. However, this reduction will apply on-
ly to the portion of the compensatory or severance payment
that was calculated without taking account of the first six
months of the remaining term of the Managing Board mem-
ber’s contract. The stock-based compensation components for
which a firm commitment already exists remain unaffected.
No severance payments are made to the extent the Managing
Board member receives benefits from third parties on the occa-
sion of, or in connection with, a change of control. A right of
termination does not exist if the change of control occurs
within a period of twelve months prior to a Managing Board
member’s retirement.