Siemens 2013 Annual Report Download - page 132

92 A. To our Shareholders 117 B. Corporate Governance
118 B. Corporate Governance Report
124 B. Corporate Governance statement pursuant to
Section a of the German Commercial Code
(part of the Combined Management Report)
126 B. Compliance Report
129 B. Compensation Report
(part of the Combined Management Report)
148 B. Takeover-relevant information (pursuant to
Sections  para.  and  para.  of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)

In fiscal , the remuneration system for the Managing
Board had the following components:
Non-performance-based components
Base compensation
Base compensation is paid as a monthly salary. It is reviewed
annually, and revised if appropriate. The base compensation of
the President and CEO Joe Kaeser has been €,, per
year since his appointment on August , . The base com-
pensation of the CFO and those members of the Managing
Board who have responsibilities for Sector portfolios has been
€, per year since October , . The base compen-
sation of the other members of the Managing Board has
remained unchanged at €, per year since October ,
.
Fringe benefits
Fringe benefits include costs, or the cash equivalent, of
non-monetary benefits and other perquisites, such as provi-
sion of a Company car, contributions toward the cost of insur-
ance, reimbursement of fees for legal advice, tax advice and
accommodation and moving expenses, including a gross-up
for any taxes that have to be borne in this regard, as well as
costs relating to preventive medical examinations.
Performance-based components
Variable compensation (bonus)
The variable compensation (bonus) is based on the Company ’s
business performance in the past fiscal year. The targets for
the variable compensation are derived from “One Siemens”,
our target system for sustainably enhancing corporate value.
On the basis of this target system, the Supervisory Board at
the beginning of each fiscal year defines specific targets.
Corresponding target parameters – in addition to other fac-
tors – also apply to senior managers, with a view to establish-
ing a consistent target system throughout the Company.
For a % target attainment (target amount) the amount of
the bonus equals the amount of base compensation. The
bonus is subject to a ceiling (cap) of %. If targets are sub-
stantially missed, the variable compensation may not be paid
at all.
The Supervisory Board is entitled to revise the amount result-
ing from attaining targets, by as much as % upward or
downward, at its duty-bound discretion (pflichtgemäßes
Ermessen); the adjusted amount of the bonus paid can be
as much as % of the target amount. In choosing the factors
to be considered in deciding on possible revisions of the bonus
payouts (±%), the Supervisory Board takes account of in-
centives for sustainable corporate management. The revision
option may also be exercised in recognition of Managing Board
members’ individual achievements.
The bonus is paid half in cash, and half in the form of non-for-
feitable stock commitments (Bonus Awards). After a four-year
waiting period, the beneficiary will receive one share of
Siemens stock for each Bonus Award. Instead of the transfer of
Siemens stock, an equivalent cash settlement may be effected.
Long-term stock-based compensation
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards). The beneficiaries
will receive one free share of Siemens stock for each Stock Award
after a restriction period. Beginning with the award for fiscal
, the restriction period for Stock Awards ends at the close of
the second day after publication of the preliminary operating
results for the fourth calendar year after the date of the award.
In the event of extraordinary unforeseen developments that
have an impact on the stock price, the Supervisory Board may
decide to reduce the number of promised Stock Awards retro-
actively, or it may decide that in lieu of a transfer of Siemens
stock only a cash settlement in a defined and limited amount
will be paid, or it may decide to postpone transfers of Siemens
stock for payable Stock Awards until the developments have
ceased to have an impact on the stock price.
In the event of a % target attainment, the annual target
amount for the monetary value of the Stock Awards commit-
ment will be €. million for the President and CEO (effective
August , ), and € million for each of the other members
of the Managing Board. Beginning with fiscal , the Super-
visory Board has the option of increasing, on an individual ba-
sis, the target amount for a member of the Managing Board
who has been reappointed by as much as % above the
amount of € million, for one fiscal year at a time. This option
enables the Supervisory Board to take account of the Manag-
ing Board member’s individual accomplishments and experi-
ence as well as the scope and demands of his or her function.
This rule does not apply to the President and CEO.
The performance-based component of long-term stock-based
compensation is likewise founded on the One Siemens target
system. The allocation rules for long-term stock-based com-
pensation take this focus into account as follows:
> On the one hand, half of the annual target amount for the
annual Stock Awards is linked to the average basic earnings
per share for the last three completed fiscal years from
continuing and discontinued operations (EPS). In principle,
the target value is the average basic EPS from the past three