Siemens 2014 Annual Report Download - page 136

108 A. To our Shareholders 131 B. Corporate Governance
132 B. Corporate Governance Report
136 B. Corporate Governance statement pursuant to
Section a of the German Commercial Code
(part of the Combined Management Report)
138 B. Compliance Report
(part of the Combined Management Report)
144 B. Compensation Report
(part of the Combined Management Report)
165 B. Takeover-relevant information (pursuant to
Sections  para.  and  para.  of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)

Supervisory Board’s plenary meetings regarding the system of
Managing Board compensation, including the implementation
of this system in the Managing Board contracts, the definition
of the targets for variable Managing Board compensation, the
determination and review of the appropriateness of the total
compensation of individual Managing Board members and the
approval of the annual Compensation Report.
The Audit Committee comprises the Chairman of the Super-
visory Board, three of the Supervisory Board’s shareholder
representatives and four of the Supervisory Board’s employee
representatives. According to the German Stock Corporation
Act, the Audit Committee must include at least one indepen-
dent Supervisory Board member with knowledge and experi-
ence in the application of accounting principles or the audit-
ing of financial statements. The Chairman of the Audit
Committee, Dr. Hans Michael Gaul, fulfills these statutory re-
quirements. The Audit Committee oversees, in particular, the
accounting process and conducts a preliminary review of the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report. On the basis of the independent audi-
tors’ report on their audit of the annual financial statements,
the Audit Committee makes, after its preliminary review, rec-
ommendations regarding Supervisory Board approval of the
Annual Financial Statements of Siemens AG and the Consoli-
dated Financial Statements of the Siemens Group. In addition
to the work performed by the independent auditors, the Audit
Committee discusses the Company’s quarterly financial state-
ments and half-year financial reports, which are prepared by
the Managing Board, as well as the report on the auditors’ re-
view of the quarterly financial statements and the half-year fi-
nancial report (condensed financial statements and interim
management report). It concerns itself with the Company’s
risk monitoring system and oversees the effectiveness of the
internal control system as this relates, in particular, to finan-
cial reporting, the risk management system and the internal
audit system. The Audit Committee receives regular reports
from the Internal Audit Department. It prepares the Supervi-
sory Board’s recommendation to the Annual Shareholders’
Meeting concerning the election of the independent auditors
and submits the corresponding proposal to the Supervisory
Board. It awards the audit contract to the independent auditors
elected by the Annual Shareholders’ Meeting and monitors the
independent audit of the financial statements – including, in
particular, the auditors’ independence, professional expertise
and services.
The Compliance Committee comprises the Chairman of the
Supervisory Board, three of the Supervisory Board’s shareholder
representatives and four of the Supervisory Board’s employee
representatives. The Compliance Committee concerns itself, in
particular, with the Company’s adherence to statutory provi-
sions, official regulations and internal Company policies.
The Nominating Committee, which comprises the Chairman
and the Second Deputy Chairman of the Supervisory Board as
well as two further members to be elected by the shareholder
representatives of the Supervisory Board from among their own
number, is responsible for making recommendations to the
Supervisory Board on suitable candidates for election as share-
holder representatives on the Supervisory Board by the Annual
Shareholders’ Meeting. In preparing these recommendations,
the objectives specified by the Supervisory Board regarding its
composition are to be taken into account as well as the required
knowledge, abilities and experience of the proposed candi-
dates; attention shall also be paid to independence, diversity
and, in particular, the appropriate participation of women.
The Mediation Committee, which comprises the Chairman of
the Supervisory Board, the First Deputy Chairman (who is
elected in accordance with the German Codetermination Act),
one of the Supervisory Board’s shareholder representatives and
one of the Supervisory Board’s employee representatives, sub-
mits proposals to the Supervisory Board in the event that the
Supervisory Board cannot reach the two-thirds majority
required for the appointment or dismissal of a Managing Board
member.
The Innovation and Finance Committee comprises the Chair-
man of the Supervisory Board, three of the Supervisory Board’s
shareholder representatives and four of the Supervisory Board’s
employee representatives. Based on the Company’s overall
strategy, the Committee discusses, in particular, the Company’s
focuses of innovation and prepares the Supervisory Board’s
discussions and resolutions regarding questions relating to the
Company’s financial situation and structure ‒ including annual
planning (budget) ‒ as well as the Company’s fixed asset
invest ments and its financial measures. In addition, the Inno-
vation and Finance Committee has been authorized by the
Supervisory Board to decide on the approval of transactions
and measures that require Supervisory Board approval and
have a value of less than €  million.
The composition of the Supervisory Board and its committees
is presented in chapter D. SUPERVISORY BOARD AND MANAGING
BOARD on pages  -  of this Annual Report. Information on
the work of the Supervisory Board is provided in the A.
REPORT OF THE SUPERVISORY BOARD on pages  - . The com-
pensation paid to the members of the Supervisory Board
is explained in chapter B. COMPENSATION REPORT on pages
 - .