Siemens 2014 Annual Report Download - page 149

171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information
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which the individual has been a Managing Board member, as
well as the annual and long-term expense to the Company as a
result of that provision. The non-forfeitability of pension bene-
fi t commitments is in compliance with the provisions of the
German Company Pensions Act (Betriebsrentengesetz). Special
contributions may be granted to Managing Board members on
the basis of individual decisions of the Supervisory Board. In
the case of new appointments of members of the Managing
Board from outside the Company, these contributions may
be defi ned as non-forfeitable from their inception. If a member
of the Managing Board earned a pension benefi t entitlement
from the Company before the BSAV was introduced, a portion
of his or her contributions went toward fi nancing this prior
commitment.
Members of the Managing Board are entitled to benefi ts under
the BSAV on reaching age , at the earliest, or age  for ben-
efi t commitments made on or after January , . As a rule,
the accrued pension benefi t balance is paid out to the
Managing Board member in twelve annual installments. At the
request of the Managing Board member or of his or her surviv-
ing dependents, the pension benefi t balance may also be paid
out in fewer installments or as a lump sum, subject to the
Company’s consent. The accrued pension benefi t balance may
also be paid out as a pension. As a further alternative, the
Managing Board member may choose a combination of pay-
ment in one to twelve installments and payment of a pension.
If the pension option is chosen, a decision must be made as to
whether it should include pensions for surviving dependents.
If a member of the Managing Board dies while receiving a pen-
sion, benefi ts will be paid to the member’s surviving depen-
dents if the member chose such benefi ts. The Company will
then provide a limited-term pension to surviving children until
they reach age , or age  in the case of benefi t commitments
made on or after January , .
Benefi ts from the retirement benefi t system that was in place
before the BSAV are normally granted as pension benefi ts with
a surviving dependent’s pension. In this case as well, a payout
in installments or a lump sum may be chosen instead of pen-
sion payments.
Members of the Managing Board who were employed by the
Company on or before September , , are entitled to tran-
sition payments for the fi rst six months after retirement, equal
to the difference between their fi nal base compensation and the
retirement benefi ts payable under the corporate pension plan.
Commitments in connection with termination
of Managing Board membership
Managing Board contracts provide for a compensatory payment
if membership on the Managing Board is terminated pre-
maturely by mutual agreement, without serious cause. The
amount of this payment must not exceed the value of two
years’ compensation and compensate no more than the re-
maining term of the contract (cap). The amount of the compen-
satory payment is calculated on the basis of base compensa-
tion, together with the variable compensation (bonus) and the
long-term stock-based compensation (Stock Awards) actually
received during the last fi scal year before termination. The
compensatory payment is payable in the month when the
member leaves the Managing Board. In addition, a one-time
special contribution is made to the BSAV. The amount of this
contribution is based on the BSAV contribution that the Board
member received in the previous year, and on the remaining
term of the appointment, but is limited to not more than two
years’ contributions (cap). The above benefi ts are not paid if an
amicable termination of the member’s activity on the Managing
Board is agreed upon at the member’s request, or if there is
serious cause for the Company to terminate the employment
relationship.
In the event of a change of control that results in a substantial
change in the position of the Managing Board member – for
example, 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 contract with the Company for good cause. A change
of control exists if one or more shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling infl uence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an inter-
company agreement within the meaning of Section  of the
German Stock Corporation Act (Aktiengesetz), 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 severance payment in the amount of
not more than two years’ compensation. The calculation of the
annual compensation includes 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 fi scal year prior to termination of the con-
tract. The stock-based components for which a fi rm commit-
ment already exists will remain unaffected. There is no entitle-
ment to a severance payment if the Managing Board member
receives benefi ts from third parties in connection with a
change of control. Moreover, there is no right to terminate if
the change of control occurs within a period of twelve months
prior to a Managing Board member’s retirement.