Siemens 2013 Annual Report Download - page 135

155 C. Combined Management Report 253 D. Consolidated Financial Statements 357 E. Additional Information

The remuneration system for the Managing Board members
applicable as of fiscal  will be submitted for approval to the
Annual Shareholders‘ Meeting on January , . For a de-
scription of the revisions compared to the remuneration system
currently in place, see
B... REVISIONS OF THE REMUNERATION
SYSTEM FOR THE MANAGING BOARD FOR FISCAL .
B... REMUNERATION OF THE MEMBERS
OF THE MANAGING BOARD FOR FISCAL 
On the basis of our One Siemens target system, at the begin-
ning of the fiscal year the Supervisory Board set the targets
and weighting for the unchanged parameters compared to the
previous year: organic revenue growth, return on capital em-
ployed (ROCE) adjusted, and Free cash flow, in each case on the
basis of continuing operations, together with EPS. The defini-
tion of these parameters and their weighting acknowledges a
sustainable enhancement of corporate value. An internal re-
view of the appropriateness of the Managing Board’s compen-
sation for fiscal  has confirmed that the remuneration of
the Managing Board resulting from the target attainment for
fiscal  is to be considered appropriate. Following the deci-
sion on determining the achievement of the targets set at the
beginning of the fiscal year, the Supervisory Board decided at
its meeting on November , , to set the variable compen-
sation component (bonus), the Stock Awards to be granted
and the pension benefit contributions as follows:
Variable compensation (bonus)
In setting the targets for the variable compensation (bonus) at
the beginning of fiscal , the Supervisory Board took into
account that the Company continues to focus on a sustainable
appreciation of value. This focus is intended to enable the
Company to maintain its financial flexibility and hold its own
against competitors in periods of high market volatility:
> The emphasis in terms of the sustainable enhancement of
value is on capital efficiency and capital structure. This was
taken into account in weighting the two target parameters
of ROCE adjusted, and Free cash flow.
> The target for organic revenue growth allowed for the great
uncertainty of the competitive environment and the goal of
capital-efficient growth.
> The target for ROCE adjusted allowed for the first-time appli-
cation of the revised IAS R reporting standard. The expec-
tations for business in fiscal  as well as the “Siemens
” program were also considered.
> The target for Free cash flow was maintained at the prior
year’s level, which represented a noticeable increase at that
time. The trend towards lower advance payments by cus-
tomers was also taken into account.
As a consequence, the following targets were set and attained
with respect to the variable compensation (bonus):
The values measured for target attainment were not adjusted.
In an overall assessment of all relevant aspects, the Supervisory
Board decided, exercising its duty-bound discretion (pflicht-
gemäßes Ermessen), to adjust the bonus payout amounts re-
sulting from target attainment downward for all Managing
Board members resulting in target attainment of % for the
determination of the payout amounts of the variable compen-
sation (bonus). In its decision, the Supervisory Board, among
other factors took into account that the Company did not meet
its expectations compared to competitors, especially with re-
gard to profitability.
In addition, the Supervisory Board reflected the performance of
individual Managing Board members and decided upon further
individual adjustments for certain Managing Board members.
Long-term stock-based compensation
For half of the annual target amount for the Stock Awards, an
average basic EPS of €. was determined for fiscal years 
through , yielding a target attainment of %.
For the other half of the annual target amount for the Stock
Awards, the Supervisory Board approved a number of Stock
Awards equivalent to the monetary value of half the target
amount on the award date. The amount by which these stock
commitments must be adjusted – or an additional cash pay-
ment must be made – after the end of the restriction period
will depend on the performance of Siemens stock compared to
the stock of five competitors (ABB, General Electric, Philips,
Rockwell, Schneider) over the coming four years, and will
therefore not be determined until after the end of fiscal .
Target parameter Weight % of target Actual  figure Target attainment
Revenue growth (organic)
20% (0.5)% (1.1)% 87.80%
ROCE adjusted
40% 15.1% 13.8% 67.75%
Free cash flow
40% €3,600 million €5,257 million 155.24%
Target attainment (calculative) 106.76%
1 Continuing operations.
The number of stock commitments (Bonus Awards and Stock
Awards) granted was based on the closing price of Siemens
stock in Xetra trading on the date of award less the present
value of dividends expected during the holding period, be-
cause beneficiaries are not entitled to receive dividends. This
figure for determining the number of commitments amount-
ed to €. (: €.).
Benefits associated with termination
of Managing Board membership
In connection with the mutually agreed premature termination
of the Managing Board membership of former President and
CEO Peter Löscher as of July , , it was agreed that his
contract with the Company would terminate as of September
, . His entitlements agreed under the contract remained
in effect until that date. A compensatory payment in a gross
amount of €,, was agreed upon with Mr. Löscher in
connection with the mutually agreed premature termination
of his activity as President and CEO, together with a one-time
special contribution of €,, to the BSAV, to be credited
in January . It was also agr
eed with Mr. Löscher that his
long-term stock-based compensation (Stock Awards) for fiscal
 will be calculated after the actual target attainment is
available and awarded at the usual date. These , Stock
Awards will be settled in cash according to the provisions of
the contract as no employment relationship will be in place at
the date of award. The Company has furthermore agreed with
Mr. Löscher to reimburse out-of-pocket expenses up to a max-
imum of €, plus value-added tax. For his part, Mr.
Löscher has agreed not to work for any significant competitor
of Siemens AG for a period of two years after the end of his
employment contract, i.e., until September , ; Siemens
will not provide additional compensation for this post-
contractual non-compete commitment. However, the Stock
Awards that were granted in the past for fiscal 2010, 2011 and
2012 and for which the restriction period is still in effect, will
be absolutely maintained, see B.4.1.3 ADDITIONAL INFORMA-
TION ON STOCK-BASED COMPENSATION INSTRUMENTS IN FISCAL 2013.
In connection with the mutually agreed premature termina-
tion of the Managing Board membership of former Managing
Board member Brigitte Ederer as of September 30, 2013, it
was agreed upon that her contract with the Company would
end at the same time. A compensatory payment in a gross
amount of €5,600,019 was agreed upon with Ms. Ederer in
connection with the mutually agreed premature termination
of her activity as Managing Board member, together with a
one-time special contribution of €882,000 to the BSAV, to be
credited in January 2014. It was also agreed with Ms. Ederer
that her long-term stock-based compensation (Stock Awards)
for fiscal 2013 will be calculated after the actual target attain-
ment is available and awarded at the usual date. These 13,477
Stock Awards will be settled in cash according to the provi-
sions of the contract as no employment relationship will be in
place at the date of award. The Company has furthermore
agreed with Ms. Ederer to reimburse out-of-pocket expenses
up to a maximum of €30,000 plus value-added tax. The Stock
Awards that were granted in the past for fiscal 2010, 2011 and
2012 and for which the restriction period is still in effect, will
be absolutely maintained, see B.4.1.3 ADDITIONAL INFORMATION
ON STOCK-BASED COMPENSATION INSTRUMENTS IN FISCAL 2013.
In determining the amount of the compensatory payments for
Mr. Löscher and Ms. Ederer, in accordance with the terms of
their contracts with the Company, the base compensation for
fiscal 2013 and the variable compensation and long-term stock-
based compensation actually received for fiscal 2012 were ap-
plied and limited, as applicable, to either two annual payments
in total or the compensation for the remaining terms of their
appointments. The portion of compensatory payments that
was calculated excluding the first six months of the remaining
contract term was reduced by 15% as a lump-sum allowance
for discounted values and for income earned elsewhere. In ad-
dition, non-monetary benefits were covered by a payment in
the amount of 5% of the compensatory payment.
Total compensation
On the basis of the decisions by the Supervisory Board
described above, Managing Board compensation for fiscal 2013
totaled €34.58 million, a decrease of 12.7% (2012: €39.61 mil-
lion). Of this total amount, €16.98 million (2012: €17.45 million)
was attributable to cash compensation and €17.60 million
(2012: €22.16 million) to stock-based compen sation. Thus,
more than half of the compen sation was paid in the form of
stock-based instruments with waiting or restriction periods of
four years, and therefore on a deferred basis.
The compensation for fiscal 2013 presented in the following
table not only takes account of the applicable reporting stan-
dards, but also of the new recommendations of the GCGC
with regard to the disclosure of remuneration of the Manag-
ing Board. Consequently, the information is set forth in a
model table recommended by the Code and shows the value
of benefits granted for the year under review. The figures pre-
sented also include the attainable minimums or maximums,
as applicable. The fair values shown for granted stock-based
compensation were calculated on the basis of the applicable
reporting standards. The transfer of one share per award will
not take place until the expiration of the four-year waiting or
restriction period, i.e., not until November 2017. The number
of Stock Awards linked to the performance of the price of
Siemens stock will be adjusted after the end of the restriction
period, on the basis of the actual target attainment. Accord-
ingly, the value of the actual shares transferred may be high-
er or lower than shown here, also depending on the stock
price in effect at the time of transfer.
The compensation presented on the following pages was
granted to the members of the Managing Board for fiscal 2013
(individualized disclosure).