Siemens 2014 Annual Report Download - page 307

247 D. Consolidated Financial Statements 337 E. Additional Information
248 D. Consolidated Statements of Income
249 D. Consolidated Statements of Comprehensive Income
250 D. Consolidated Statements of Financial Position
251 D. Consolidated Statements of Cash Flows
252 D. Consolidated Statements of Changes in Equity
254 D. Notes to Consolidated Financial Statements
330 D. Supervisory Board and Managing Board

In fiscal  and , agreements were entered into which
entitle members of the Managing Board to stock awards contin-
gent upon attaining a prospective performance-based target of
Siemens stock relative to five competitors (for fiscal  Philips
was replaced by Alstom). The fair value of these entitlements
amounting to €  million and €  million, respectively, in fiscal
 and , was calculated by applying a valuation model.
Inputs to that model include an expected weighted volatility of
Siemens shares of  % in fiscal  and  % in fiscal  and
a market price of € . in fiscal  and € . in fiscal 
per Siemens share. Expected volatility was determined by refer-
ence to historic volatilities. The model applies a risk-free inter-
est 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 correlations
were determined by reference to historic correlations.
Compensation expense related to stock awards is generally rec-
ognized over five years until they vest, including a restriction
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 en-
titlements amounting to €  million and €  million, respec-
tively, in fiscal  and , was determined by calculating
the present value of the target amount. Compensation expense
related to Bonus Awards is generally recognized over the vest-
ing 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.
Commitments to members of the senior
management and other eligible employees
In fiscal  and , , and ,, stock awards, re-
spectively, were granted to members of the senior manage-
ment 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 represent-
ing the EPS target attainment.
In fiscal  and , , and , stock awards, re-
spectively, were granted to members of the senior manage-
ment and other eligible employees contingent upon attaining a
prospective performance-based target of the Siemens stock
relative to five competitors. The fair value of these stock awards
amounting to €  million and €  million, respectively, in fis-
cal  and , of which €  million and €  million relate
to equity instruments, 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 reference
to historic volatilities. 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 correlations were
determined by reference to historic correlations. Compensation
expense related to these stock awards is recognized 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 ,
 
Awards Awards
Non-vested, beginning of period 4,876,455 4,217,588
Granted 1,421,211 2,158,079
Vested and transferred (1,041,376) (1,073,355)
Forfeited (120,350) (101,192)
Settled (149,942) (324,665)
Non-vested, end of period 4,985,998 4,876,455
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 quarter.
Plan participants receive the right to one Siemens share with-
out 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 dividends. The right
to receive matching shares forfeits if the underlying investment
shares are transferred, sold, pledged or otherwise encumbered.
Matching shares may be settled in newly issued shares of capi-
tal stock of Siemens AG, treasury shares or in cash. The settle-
ment method will be determined by the Managing Board. Each
fiscal year, the Managing Board decides whether or not to issue
a new tranche under the Share Matching Plan.