Siemens 2013 Annual Report Download - page 324

92 A. To our Shareholders 117 B. Corporate Governance 155 C. Combined Management Report

and by reference to implied volatilities in fiscal . The mod-
el applies a risk-free interest rate of up to .% in fiscal 
and up to .% in fiscal  and an expected dividend yield of
.% in fiscal  and .% in fiscal . Assumptions con-
cerning share price correlations were determined by reference
to historic correlations.
Compensation expense related to stock awards is generally
recognized over five years until they vest, including a restric-
tion period of four years.
In fiscal  and , agreements were entered into which
entitle members of the Managing Board to Bonus Awards con-
tingent upon the target attainment. The fair value of these
entitlements amounting to € million in each fiscal year
reported, was determined by calculating the present value of
the target amount. Compensation expense related to Bonus
Awards is generally recognized over the vesting period of one
year. Beneficiaries will receive one Siemens share without
payment of consideration for each Bonus Award, following an
additional waiting period of four years.
The remuneration system of the Managing Board and the
changes in the stock awards held by Managing Board mem-
bers are explained in detail at B.4 COMPENSATION REPORT with-
in chapter B. CORPORATE GOVERNANCE.
Commitments to members of the senior
management and other eligible employees
In fiscal  and , ,, and ,, stock awards
were granted to members of the senior management and
other eligible employees contingent upon attaining an EPS-
based target. The fair value of these stock awards amounts to
€ million and € million, respectively, in fiscal  and
 and corresponds to the target amount representing the
EPS target attainment.
In fiscal  and , , and , stock awards were
granted to members of the senior management and other eli-
gible employees contingent upon attaining a prospective per-
formance-based target of the Siemens stock relative to five
competitors. The fair value of these stock awards amounting
to € million and € million, respectively, in fiscal  and
, of which € million and € million relate to equity in-
struments, was calculated by applying a valuation model. In
fiscal  and , inputs to that model include an expected
weighted volatility of Siemens shares of .% and .%,
respectively, and a market price of €. and €. per
Siemens share. Expected volatility was determined by refer-
ence to historic volatilities in fiscal  and by reference to
implied volatilities in fiscal . The model applies a risk-free
interest rate of up to .% in fiscal  and up to .% in fiscal
 and an expected dividend yield of .% in fiscal  and
.% in fiscal . Assumptions concerning share price cor-
relations were determined by reference to historic correlations.
Compensation expense related to these stock awards is recog-
nized over four years until they vest.
The following table shows the changes in the stock awards
held by members of the senior management and other eligible
employees:
Year ended September 30,
2013 2012
Awards Awards
Non-vested, beginning of period 4,217,588 3,857,315
Granted 2,158,079 2,028,554
Vested and transferred (1,073,355) (1,531,944)
Forfeited/settled (425,857)1(136,337)1
Non-vested, end of period 4,876,455 4,217,588
1 Consists of 101,192 and 111,776 forfeited and 324,665 and 24,561 settled awards,
respectively, in fiscal 2013 and 2012.
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS
. Share Matching Plan
In fiscal  and , the Company issued a new tranche un-
der the Share Matching Plan. Senior managers of Siemens AG
and participating Siemens companies may invest a specified
percentage of their compensation in Siemens shares. Within a
predetermined period in the first quarter of each fiscal year,
plan participants decide on their investment amount for which
investment shares are purchased. The shares are purchased at
the market price at a predetermined date in the second quar-
ter. Plan participants receive the right to one Siemens share
without payment of consideration (matching share) for every
three investment shares continuously held over a period of
three years (vesting period) provided the plan participant has
been continuously employed by Siemens AG or another
Siemens company until the end of the vesting period. During
the vesting period, matching shares are not entitled to divi-
dends. The right to receive matching shares forfeits if the un-
derlying investment shares are transferred, sold, pledged or
otherwise encumbered. Matching shares may be settled in