Siemens 2013 Annual Report Download - page 152

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person or a group of persons acting in concert acquires effec-
tive control over Siemens AG by being able to exercise decisive
influence over its activities (Art.  () of Council Regulation (EC)
139 / 2004). In addition, Siemens AG has a bilateral credit line at
its disposal in the amount of €450 million which may be termi-
nated by the lender if major changes in Siemens AG’s corpo-
rate legal situation occur that jeopardize the orderly repayment
of the credit.
In March 2013, a consolidated subsidiary as borrower and
Siemens AG as guarantor entered into two bilateral loan agree-
ments, each of which has been drawn in the full amount of
US$500 million. Both agreements provide their respective
lender with a right of termination in the event that (1)
Siemens AG becomes a subsidiary of another company or (2) a
person or a group of persons acting in concert acquires effec-
tive control over Siemens AG by being able to exercise decisive
influence over its activities (Art. 3 (2) of Council Regulation (EC)
139 / 2004).
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documen-
tation (ISDA Agreements) grant the counterparty a right of
termination upon the occurrence of the following events: (1)
the Company consolidates with, merges into, or transfers at
least substantially all its assets to a third party and (i) the re-
sulting entity ’s creditworthiness is materially weaker than the
Company ’s immediately prior to such event, or (ii) the result-
ing entity fails to simultaneously assume the Company ’s obli-
gations under the ISDA Agreement; or (2) additionally some
ISDA Agreements grant the counterparty a right of termination
upon a third party acquiring the beneficial ownership of equity
securities having the power to elect a majority of the Compa-
ny ’s Supervisory Board or otherwise acquiring the power to
control the Company ’s material policy-making decisions and
the creditworthiness of the Company is materially weaker than
it was immediately prior to such event. In either situation,
ISDA Agreements are designed such that upon termination all
outstanding payment claims documented under them are to
be netted.
In February 2012 Siemens issued bonds with warrant units
with a volume of US$3 billion. In case of a change of control,
the terms and conditions of these warrants enable their hold-
ers to receive a higher number of Siemens shares in accor-
dance with an adjusted strike price if they exercise their option
rights within a certain period of time after the change of con-
trol. This period of time shall end either (1) not less than 30
days and no more than 60 days after publication of the notice
of the issuer regarding the change of control, as determined
by the issuer or (2) 30 days after the change of control first be-
comes publicly known. The strike price adjustment decreases
depending on the remaining term of the warrants and is deter-
mined in detail in the terms and conditions of the warrants. In
this context, a change of control occurs if a person or persons
acting in concert, respectively, acquires or acquire control of
the Company.
B..9 Compensation agreements with
members of the Managing Board or
employees in the event of a takeover bid
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (e.g., due
to a change in corporate strategy or a change in the Managing
Board member’s duties and responsibilities), the member of
the Managing Board has the right to terminate his or her con-
tract with the Company for good cause. A change of control
exists if one or several shareholders acting jointly or in concert
acquire a majority of the voting rights in Siemens AG and exer-
cise a controlling influence, or if Siemens AG becomes a depen-
dent
enterprise as a result of entering into an intercompany
agreement within the meaning of Section 291 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 sev-
erance payment in the amount of not more than two years’
compensation. The calculation of the annual compensation in-
cludes 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 compen-
sation 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 con-
trol occurs within a period of twelve months prior to a Manag-
ing Board member’s retirement. Additionally, the severance
payments cover non-monetary benefits by including an amount
of 5% of the total severance amount. Severance payments will
be reduced by 15% as a lump-sum allowance for discounted
values and for income earned elsewhere. However, this reduc-
tion will apply only to the portion of the severance payment
that was calculated without taking account of the first six
months of the remaining term of the Managing Board mem-
ber’s contract.