Siemens 2014 Annual Report Download - page 162

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)

Long-term stock-based compensation. Long-term stock-
based compensation will continue to be granted in the form of
forfeitable Stock Awards for Siemens stock. To refl ect a Manag-
ing Board member’s individual experience as well as the scope
and demands of his or her function, the annual target amount
for all Managing Board members, including the President and
CEO, can now be increased, on an individual basis, by as much
as  % of the contractually agreed-upon target amount for one
fi scal year at a time. Starting with fi scal , this long-term
stock-based compensation will be linked solely to the perfor-
mance of Siemens stock in comparison to competitors. The
Supervisory Board will also decide on a target system (target
value for  % and target curve) for the performance of
Siemens stock relative to the stock of – at present – fi ve compet-
itors: ABB, General Electric, Rockwell, Schneider and Toshiba.
The change in stock price will be measured on the basis of a
twelve-month reference period (compensation year) over three
years (performance period), while the four-year restriction pe-
riod for Stock Awards will still apply unchanged. After this re-
striction period expires, the Supervisory Board will determine
how much better or worse Siemens stock has performed rela-
tive to the stock of its competitors. This determination will yield
a target attainment of between  % and  % (cap). If target at-
tainment is above  %, the members of the Managing Board
will receive an additional cash payment, the amount of which
will be based on the outperformance. If target attainment is
less than  %, a number of Stock Awards equivalent to the
shortfall from the target will expire without replacement. All in
all, the allocation by way of the Stock Awards will be limited to
 % of the target amount (maximum amount).
Share Ownership Guidelines. The share ownership obli-
gation for members of the Managing Board will remain un-
changed:  % of base compensation for the President and
CEO,  % of base compensation for the other members of the
Managing Board during the four years prior to the relevant date
of proof.
Compensatory payments in connection with termination
of Managing Board membership. The terms for compensa-
tory payments will remain essentially unchanged. In particular,
the compensatory payment still cannot exceed the value of two
years’ compensation. In the future, the compensatory and sev-
erance payments will be reduced by  % as a lump-sum allow-
ance for discounted values and for income earned elsewhere;
this reduction will apply only to the portion of the compensa-
tory or severance payment that was calculated without taking
account of the fi rst six months of the remaining term of the
Managing Board member’s contract.
Even after the adjustment of the remuneration system for the
Managing Board, regulatory requirements will be met in full.
More than half of the variable compensation has a multi-year
basis. The new system continues to reward long-term commit-
ment to and on behalf of the Company as well as Managing
Board members’ participation in a sustained increase in the
Company’s value.
Remuneration system for Managing Board members as of fiscal 2015
Compensation
overall
max. .-times
of target
compensation
Stock-based
components
(Stock Awards):
max. % of
target amount
Base
compen -
sation
Base
compen -
sation
Stock-
based
compen-
sation
Cash
compen-
sation
Bonus (cash):
 – %
add. + %
adjustment
Performance-based component
Obligation to hold shares during term of office on the Managing Board
Performance-based component with deferred payout
Non-performance-based component
Long-term stock-based compensation
> target parameter: stock price
compared to  competitors
> variability:  – %
Variable compensation (bonus)
>  targets – one third each:
capital efficiency, profit, individual
> variability:  – %
add. ± % adjustment
Target compensation Maximum amounts of compensation Share Ownership Guidelines
President
and CEO:
-times
of Base
compen-
sation
Base
compen -
sation
Managing
Board
member:
-times
of Base
compen-
sation