Siemens 2013 Annual Report Download - page 122

92 A. To our Shareholders 117 B. Corporate Governance
118 B.1 Corporate Governance Report
124 B.2 Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
126 B.3 Compliance Report
129 B.4 Compensation Report
(part of the Combined Management Report)
148 B.5 Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
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Committee takes into account a candidate’s professional quali-
fications, international experience and leadership qualities,
the age limit specified for Managing Board members, 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 ques-
tions regarding the Company ’s corporate governance and pre-
pares the resolutions to be approved by the Supervisory Board
regarding the Declaration of Conformity with the Code, includ-
ing the explanation of deviations from the Code, and regarding
the approval of the Corporate Governance Report, and the
Report of the Supervisory Board to the Annual Shareholders‘
Meeting. Furthermore, the Chairman’s Committee submits re c-
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 Compensation Committee, which was newly formed by
the Supervisory Board on July 31, 2013, and comprises the
members of the Chairman’s Committee of the Supervisory
Board as well as one of the Supervisory Board’s shareholder
representatives and one of the Supervisory Board’s employee
representatives, prepares the proposals for decisions by the
Supervisory Board’s plenary meetings regarding the system of
Managing Board compensation, including the implementation
of this system in the Managing Board contracts, the definition
of the targets for variable Managing Board compensation, the
determination and review of the appropriateness of the total
compensation of individual Managing Board members and the
approval of the annual Compensation Report. In addition, the
Compensation Committee prepares the regular review by the
Supervisory Board’s plenary meetings of the system of Manag-
ing Board compensation.
The Audit Committee comprises the Chairman of the Super-
visory Board, two of the Supervisory Board’s shareholder repre-
sentatives and three of the Supervisory Board’s employee
representatives. In November 2013, it was decided to increase
the number of Committee members by one additional share-
holder representative and one additional employee representa-
tive. Under German law, the Audit Committee must include at
least one independent Supervisory Board member with knowl-
edge and experience in the application of accounting princi-
ples or the auditing of financial statements. The Chairman of
the Audit Committee, Dr. Hans Michael Gaul, fulfills these stat-
utory requirements. The Supervisory Board has designated
Dr. Hans Michael Gaul – in addition to Dr. Gerhard Cromme –
as an “audit committee financial expert,” 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 Annual Shareholders’ Meeting
concerning the election of the independent auditors and sub-
mits the corresponding pro posal to the full Supervisory Board.
In addition to the work performed by the independent audi-
tors, the Audit Committee also discusses the Company ’s finan-
cial statements, which are prepared by the Managing Board
quarterly, half-yearly and annually. On the basis of the inde-
pendent auditors’ report on the annual financial statements,
the Audit Committee makes, after its own review, recommen-
dations to the Supervisory Board regarding the approval of the
Stand-Alone Financial Statements of Siemens AG and the Con-
solidated Financial Statements of Siemens Group. It concerns
itself with the Company ’s risk monitoring system and oversees
the effectiveness of the internal control system as this relates,
in particular, to financial reporting, the risk management sys-
tem and the internal audit system. The Internal Audit Depart-
ment reports regularly to the Audit Committee. The Audit Com-
mittee 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 auditors’ independence, 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. In November 2013, it was decided to increase
the number of Committee members by one additional share-
holder representative and one additional employee representa-
tive. The Compliance Committee concerns itself, in particular,
with the Company ’s adherence to statutory provisions, official
regulations and internal Company policies.
The Nominating Committee, which comprises the Chairman
and the Second Deputy Chairman of the Supervisory Board as
well as two further members to be elected by the shareholder
representatives of the Supervisory Board from among their
number, is responsible for making recommendations to the
Supervisory Board on suitable candidates for election as share-
holder representatives of 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 required
knowledge, abilities and experience of the proposed candi-
dates; attention shall also be paid to independence, diversity
and, in particular, the appropriate participation of women.