Siemens 2015 Annual Report Download - page 100

Consolidated Financial Statements
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NOTE 25 Share-based payment
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of
the vesting period. Total pretax expense for share-based pay-
ment amounted to €  million and €  million for the years
ended September ,  and , respectively, and refers
primarily to equity-settled awards.
STOCK AWARDS
The Company grants stock awards to members of the Manag-
ing Board, members of the senior management and other eligi-
ble employees. Stock awards are subject to a restriction period
of about four years and entitle the beneficiary to Siemens
shares without payment of consideration following the restric-
tion period.
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earn-
ings per share (EPS, basic) of the past three fiscal years and / or
to the share price performance of Siemens relative to the share
price performance of five important competitors during the
four-year restriction period. The target attainment for the per-
formance criteria ranges between  % and  %. If the target
attainment of the prospective performance-based target of
Siemens stock relative to five competitors exceeds  %, an ad-
ditional cash payment results corresponding to the outperfor-
mance. The vesting period is four years and five years for stock
awards granted to members of the Managing Board in fiscal
, respectively.
Until fiscal , additionally one portion of the variable com-
pensation component (bonus) for members of the Managing
Board was granted in the form of non-forfeitable awards of
Siemens stock (Bonus Awards) subject to a vesting 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 Managing Board
In fiscal  and , agreements were entered into which
entitle members of the Managing Board to stock awards contin-
gent upon attaining the prospective performance-based target
of Siemens stock relative to five competitors. The fair value of
these entitlements amounting to €  million and €  million, re-
spectively, in fiscal  and , 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 cor-
relations were determined by reference to historic correlations.
In addition, in fiscal , agreements were entered into which
entitle members of the Managing Board to EPS-based stock
awards and Bonus Awards contingent upon the target attain-
ment. The fair value of these entitlements amounting to
€  million and €  million was determined by calculating the
present value of the target amount.
Commitments to members of the senior
management and other eligible employees
In fiscal  and , , and , stock awards, re-
spectively, were granted based on the EPS target. The fair value
of these stock awards amounts to €  million and €  million,
respectively, in fiscal  and , and corresponds to the
amount representing the EPS target attainment.
In fiscal  and , ,, and , stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounting to €  million and €  million, respectively, in fis-
cal  and , 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.
Changes in the stock awards held by members of the senior
management and other eligible employees are:
Fiscal year
2015 2014
Non-vested, beginning of period 4,985,998 4,876,455
Granted 1,528,957 1,421,211
Vested and fulfilled –(1,041,376)
Forfeited (159,754) (120,350)
Settled (305,951) (149,942)
Non-vested, end of period 6,049,250 4,985,998