Siemens 2013 Annual Report Download - page 131

155 C. Combined Management Report 253 D. Consolidated Financial Statements 357 E. Additional Information

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 (GCGC) and includes disclosures
in accordance with the requirements of the German Commer-
cial Code (HGB), German Accounting Standards (DRS), and
International Financial Reporting Standards (IFRS). The
Compensation Report is an integral part of the Combined
Management Report.
B.. Remuneration of members
of the Managing Board
B... REMUNERATION SYSTEM
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 com-
mitment to and on behalf of the Company, and may benefit
from any sustained increase in the Company ’s value. In the in-
terest of that aim, a substantial portion of their total remunera-
tion 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 full Super-
visory Board, based on proposals from the Chairman‘s Com-
mittee, or, beginning with July  the Compensation Com-
mittee. The Supervisory Board reviews remuneration levels
annually to ensure that they are appropriate. In that process,
the Company ’s economic situation, performance and outlook,
as well as the tasks and performance of the individual Manag-
ing Board members, are taken into account. In addition, the
Supervisory Board considers the common level of remunera-
tion in comparison with the peer companies and with the
compensation structure in place in other areas of the Com-
pany, taking due account of the relationship between the Man-
aging Board’s remuneration and that of senior management
and staff, both overall and with regard to its development over
time. The remuneration system that has been used for the
Managing Board members since fiscal  was approved
by a large majority at the Annual Shareholders’ Meeting on
January , .
B. Compensation Report
Remuneration system for Managing Board members
Non-performance-based components Performance-based components Performance-based components with deferred payout
Compensation Granted in
Share Ownership
Guidelines Obligation to hold shares for duration of membership in Managing Board
Long-term compensation
(target parameter: stock price compared
to  competitors)
Variability:  – %
Long-term stock-based compensation
(target parameter: Ø earnings per share)
Variability:  – %
Variable compensation (bonus)
(target parameters: revenue growth
(organic), ROCE (adjusted), free cash flow)
Variability:  – %;
Possibility of adjustment
by the Supervisory Board: ±  %
Base compensation
and fringe benefits
FY  FY  FY  FY  FY  FY  FY 
Stock-based
compensation
Cash
compensation
Stock Awards
(forfeitable
grants of stock)
Bonus Awards
(non-forfeitable
grants of stock)
Cash
Timing
Restriction period
and period for
target measurements
 years
Performance period
Year of compensation; subse-
quent waiting period:  years
Performance period
 years, including year of compensation;
subsequent restriction period:  years
Performance period
Year of compensation