Siemens 2013 Annual Report Download - page 134

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)

children until they reach age , or age  in the case of com-
mitments made on or after January , .
Benefits from the retirement benefit system that was in place
before the BSAV are normally granted as pension benefits with
a surviving dependents’ pension. In this case as well, a payout
in installments or a lump sum may be chosen instead of pen-
sion payments.
Members of the Managing Board who were employed by the
Company on or before September , , are entitled to transi-
tion payments for the first six months after retirement, equal to
the difference between their final base compensation and the
retirement benefits payable under the corporate pension plan.
Commitments in connection with termination
of Managing Board membership
Managing Board contracts provide for a compensatory pay-
ment if membership on the Managing Board is terminated pre-
maturely without serious cause. The amount of this payment
must not exceed the value of two years‘ compensation and
compensate no more than the remaining term of the contract
(cap). The amount of the compensatory payment is calculated
on the basis of the base compensation, the variable compen-
sation (bonus), and the long-term stock-based compensation
(Stock Awards) actually received during the last fiscal year be-
fore termination. The compensatory payment is payable in the
month when the member leaves the Managing Board. In addi-
tion, a one-time exceptional contribution is made to the BSAV.
The amount of this contribution is based on the BSAV contri-
bution that the Board member received in the previous year,
and on the remaining term of the appointment, but is limited
to not more than two years’ contributions (cap). The above
benefits are not paid if an amicable termination of the mem-
ber’s activity on the Managing Board is agreed upon at the
member‘s request, or if there is serious cause for the Company
to terminate the employment relationship.
In the event of a change of control that results in a substantial
change in the position of the Managing Board member (e.g.,
due to a change in corporate strategy or a change in the Man-
aging Board member’s duties and responsibilities), the mem-
ber of the Managing Board has the right to terminate his or
her contract with the Company for good cause. A change of
control exists if one or more shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling influence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an inter-
company agreement within the meaning of Section  of the
German Stock Corporation Act, or if Siemens AG is to be
merged into an existing corporation or other entity. If this
right of termination is exercised, the Managing Board member
is entitled to a severance payment in the amount of not more
than two years’ compensation. The calculation of the annual
compensation includes not only the base compensation and
the target amount for the bonus, but also the target amount
for the Stock Awards, in each case based on the most recent
completed fiscal year prior to termination of the contract. The
stock-based components for which a firm commitment already
exists will remain unaffected. There is no entitlement to a
severance payment if the Managing Board member receives
benefits from third parties in connection with a change of
control. Moreover, there is no right to terminate if the change
of control occurs within a period of twelve months prior to a
Managing Board member‘s retirement.
Additionally, compensatory or severance payments cover
non-monetary benefits by including an amount of % of the
total compensation or severance amount. Compensatory
or severance payments will be reduced by % as a lump-sum
allowance for discounted values and for income earned else-
where. However, this reduction will apply only to the portion
of the compensatory or severance payment that was calcu-
lated without taking account of the first six months of the
remaining term of the Managing Board member’s contract.
If a member leaves the Managing Board, the variable compo-
nent (bonus) is determined pro rata temporis after the end of
the fiscal year in which the appointment was terminated and
is settled in cash at the usual payout or transfer date, as the
case may be. If the employment contract is terminated in the
course of an appointment period, the non-forfeitable stock
awards (Bonus Awards) for which the waiting period is still in
progress remain in effect without restriction. If the employ-
ment agreement is terminated because of retirement, disabili-
ty or death, a Managing Board member’s Bonus Awards will be
settled in cash as of the date of departure from the Board.
Stock commitments that were made as long-term stock-based
compensation (Stock Awards), and for which the restriction
period is still in progress will normally forfeit without replace-
ment if the employment agreement is terminated in the course
of an appointment period. The same applies if the employ-
ment agreement is not extended after the end of an appoint-
ment period, either at the Board member’s request or because
there is serious cause that would have entitled the Company to
revoke the appointment or terminate the contract. However,
once granted, Stock Awards do not forfeit if the employment
agreement is terminated because of retirement, disability,
or death, or in connection with a spinoff, the transfer of an
operation, or a change of activity within the corporate group.
In this case, the Stock Awards will remain in effect upon termi-
nation of the employment agreement and will be honored on
expiration of the restriction period.