Siemens 2013 Annual Report Download - page 133

155 C. Combined Management Report 253 D. Consolidated Financial Statements 357 E. Additional Information
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fiscal years completed prior to the year of compensation. At
the end of each fiscal year, the Supervisory Board decides on
a figure that represents that year’s target attainment, which
may lie between % and % (cap). This target attainment
will then determine the actual monetary value of the award
and the resulting number of Stock Awards.
> On the other hand, the development of the performance of
Siemens’ stock relative to its competitors is to have a direct
effect on compensation. For this purpose, with respect to
the other half of the annual target amount for the Stock
Awards, the Supervisory Board will first grant a number of
Stock Awards equivalent to the monetary value of half the
target amount on the date of the award. The Supervisory
Board will also decide on a target system (target value for
% and target curve) for the performance of Siemens
stock relative to the stock of competitors (at present, ABB,
General Electric, Philips, Rockwell and Schneider). The refer-
ence period for measuring the target will be the same as the
four-year restriction period for the Stock Awards. After this
restriction period expires, the Supervisory Board will deter-
mine how much better or worse Siemens stock has per-
formed relative to the stock of its competitors. This determi-
nation will yield a target attainment of between % and
% (cap). If target attainment is above %, an additional
cash payment corresponding to the outperformance is ef-
fected. If target attainment is less than %, a number of
Stock Awards equivalent to the shortfall from the target will
expire without replacement.
With regard to the further terms of the Stock Awards, generally
the same principles apply for the Managing Board and for se-
nior managers; these principles are discussed in more detail in
NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
That note also includes further information about the stock-
based employee investment plans.
Share Ownership Guidelines
The Siemens Share Ownership Guidelines are an integral part
of the remuneration system for the Managing Board and senior
executives. These guidelines require the members of the
Managing Board – after a certain buildup phase – to hold
Siemens stock worth a multiple of their base compensation
(% for the President and CEO, % for the other members
of the Managing Board) during their term of office on the
Managing Board. The determining figure in this context is the
average base compensation that the relevant member of the
Managing Board has drawn over the four years of the buildup
phase. Accordingly, changes that have been made to the base
compensation in the meantime are included. Non-forfeitable
stock awards (Bonus Awards) are taken into account in deter-
mining compliance with the Share Ownership Guidelines.
Evidence that this obligation has been met must first be pro-
vided after the buildup phase, and updated annually there-
after. If the value of the accrued holdings declines below
the minimum to be evidenced from time to time because the
market price of Siemens stock has fluctuated, the member of
the Managing Board must acquire additional shares.
Pension benefit commitments
The members of the Managing Board, like all Siemens AG em-
ployees, are included in the Siemens Defined Contribution
Benefit Plan (BSAV). Under the BSAV, members of the Manag-
ing Board receive contributions that are credited to their per-
sonal pension account. The amount of the annual contribu-
tions is based on a predetermined percentage which refers to
the base compensation and the target amount for the bonus.
This percentage is decided upon annually by the Supervisory
Board; most recently it was set at %. In making its decision,
the Supervisory Board takes account of the intended level of
provision for each individual, also considering the length of
time for which the individual has been a Managing Board
member, as well as the annual and long-term expense to the
Company as a result of that provision. The non-forfeitability of
pension benefit commitments is in compliance with the pro-
visions of the German Company Pensions Act (Betriebsrenten-
gesetz). Special contributions may be granted to Managing
Board members on the basis of individual decisions of the
Supervisory Board. In the case of new appointments of mem-
bers of the Managing Board from outside the Company, these
contributions may be defined as non-forfeitable from their
inception. If a member of the Managing Board earned a
pension benefit entitlement from the Company before the
BSAV was introduced, a portion of his or her contributions
went toward financing this prior commitment.
Members of the Managing Board are entitled to benefits un-
der the BSAV on reaching age , at the earliest. As a rule, the
accrued pension benefit balance is paid out to the Managing
Board member in twelve annual installments. At the request
of the Managing Board member or of his or her surviving de-
pendents, the pension benefit balance may also be paid out
in fewer installments or as a lump sum, subject to the Compa-
ny ’s consent. The accrued pension benefit balance may also
be paid out as a pension. As a further alternative, the Manag-
ing Board member may choose a combination of payment in
one to twelve installments and payment of a pension. If the
pension option is chosen, a decision must be made as to
whether it should include pensions for surviving dependents.
If a member of the Managing Board dies while receiving a
pension, benefits will be paid to the member’s surviving de-
pendents if the member has chosen such benefits. The Com-
pany will then provide a limited-term pension to surviving