Siemens 2014 Annual Report Download - page 147

171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information

January , . The new remuneration system that takes
effect in fi scal  is explained in section B... REMUNER-
ATION SYSTEM FOR THE MANAGING BOARD FROM FISCAL  ONWARD.
The new remuneration system will be submitted to the Annual
Shareholders’ Meeting for its approval on January , .
In fi scal , the remuneration system for the Managing Board
had the following components:
Non-performance-based components
Base compensation
Base compensation is paid as a monthly salary. It is reviewed
annually, and revised if appropriate. The base compensation of
the President and CEO Joe Kaeser has been € ,, per year
since the time of his appointment on August , . The base
compensation of the CFO, of those members of the Managing
Board who have responsibilities for Sector portfolios and of Klaus
Helmrich because of his additional services as Labor Director
(“Arbeitsdirektor”) has been € , per year since October ,
. The base compensation of the other members of the Man-
aging Board has been € , per year since October , .
Fringe benefits
Fringe benefi ts include costs, or the cash equivalent, of
non-monetary benefi ts and other perquisites, such as the pro-
vision of a Company car, contributions toward the cost of insur-
ance, reimbursement of fees for legal advice, tax advice and
accommodation and moving expenses, including a gross-up for
any taxes that have to be borne in this regard, as well as costs
relating to preventive medical examinations.
Performance-based components
Variable compensation (bonus)
Variable compensation (bonus) is based on the Company’s
business performance in the past fi scal year. The targets for
variable compensation are derived from the fi nancial frame-
work of our integrative management model One Siemens. On
this basis, the Supervisory Board at the beginning of each
fi scal year defi nes specifi c targets. Corresponding targets – in
addition to other factors – also apply to senior managers, with
a view to establishing a consistent target system throughout
the Company.
For a  % target attainment (target amount), the amount of
the bonus equals the amount of base compensation. The bonus
is subject to a ceiling (cap) of  %. If targets are substantially
missed, variable compensation may not be paid at all.
The Supervisory Board is entitled to revise the amount resulting
from attaining targets by as much as  % downward or up-
ward, at its duty-bound discretion (pfl ichtgemäßes Ermessen);
the adjusted amount of the bonus paid can be as much as  %
of the target amount. In choosing the factors to be considered
in deciding on possible revisions of the bonus payouts (±  %),
the Supervisory Board takes account of incentives for sustain-
able corporate management. The revision option may also
be exercised in recognition of Managing Board members’ indi-
vidual achievements.
The bonus is paid  % in cash and  % in the form of gener-
ally non-forfeitable Siemens stock commitments (Bonus
Awards). After a four-year waiting period, the benefi ciary will
receive one share of Siemens stock for each Bonus Award. The
value of Siemens stock to be transferred for Bonus Awards
after the waiting period is subject to a ceiling of  % of the
target amount of the Bonus Awards. If this maximum amount
is exceeded, the corresponding entitlement to share commit-
ments will be forfeited without replacement. Instead of the
transfer of Siemens stock, an equivalent cash settlement may
be effected.
Long-term stock-based compensation
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards). The benefi ciaries
will receive one free share of Siemens stock for each Stock
Award after a restriction period. Beginning with the award for
fi scal , the restriction period for Stock Awards ends at the
close of the second day after publication of the preliminary
operating results for the fourth calendar year after the date of
the award.
In the event of extraordinary unforeseen developments that
have an impact on the stock price, the Supervisory Board may
decide to reduce the number of promised Stock Awards retro-
actively, or it may decide that in lieu of a transfer of Siemens
Stock only a cash settlement in a defi ned and limited amount
will be paid, or it may decide to postpone transfers of Siemens
stock for payable Stock Awards until the developments have
ceased to have an impact on the stock price.
In the event of a  % target attainment, the annual target
amount for the monetary value of the Stock Awards com-
mitment is € . million for the President and CEO (effective
August , ) and €  million for each of the other members of
the Managing Board. Beginning with fi scal , the Super-
visory Board has the option of increasing, on an individual
basis, the target amount for a member of the Managing Board
who has been reappointed by as much as  % above the
amount of €  million, for one fi scal year at a time. This option
enables the Supervisory Board to take account of the Managing
Board member’s individual accomplishments and experience as
well as the scope and demands of his or her function.