Siemens 2015 Annual Report Download - page 40

Combined Management Report

This report is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of the
German Commercial Code (Handelsgesetzbuch), the German
Accounting Standards (Deutsche Rechnungslegungs Standards)
and the International Financial Reporting Standards (IFRS).
A.10.1 Remuneration of Managing Board
members
A.10.1.1 REMUNERATION SYSTEM
The remuneration system for the Siemens Managing Board is
intended to provide an incentive for successful corporate man-
agement with an emphasis on sustainability. Managing Board
members are expected to make a long-term commitment to
and on behalf of the Company and may benefit from any sus -
tained increase in the Company’s value. For this reason, a sub-
stantial portion of their total remuneration is linked to the
long-term performance of Siemens stock. Their remuneration
is to be commensurate with the Company’s size and economic
position. Exceptional achievements are to be rewarded ade-
quately, while falling short of targets is to result in an apprecia-
ble reduction in remuneration. The compensation is also struc-
tured so as to be attractive in comparison to that of competitors,
with a view to attracting outstanding managers to the Company
and retaining them for the long term.
The system and levels for the Managing Board’s remuneration
are determined and regularly reviewed by the full Supervisory
Board, based on proposals by the Compensation Committee.
The Supervisory Board reviews remuneration levels annually to
ensure that they are appropriate. In this process, the Company’s
economic situation, performance and outlook as well as the
tasks and performance of the individual Managing Board mem-
bers are taken into account. In addition, the Supervisory Board
considers the common level of remuneration in comparison
with peer companies and with the compensation structure in
place in other areas of the Company. It also takes due account
of the relationship between the Managing Board’s remunera-
tion and that of senior management and staff, both overall and
with regard to its development over time. For this purpose, the
Supervisory Board has also determined how senior manage-
ment and the relevant staff are to be differentiated. The remu-
neration system that was in place for Managing Board members
in fiscal  was approved by a majority of . % at the Annual
Shareholders’ Meeting on January , . The individual com-
ponents of compensation – base compensation, variable com-
pensation (Bonus) and long-term stock-based compensation –
are weighted equally, and each comprises about one-third of
target compensation. This equal weighting is also applied to
the three target parameters of variable compensation.
A. Compensation Report
Remuneration system for Managing Board members as of fiscal 2015
Compensation overall
Max. 1.7 times target
compensation
Stock-based
component
(Stock Awards):
max. 300% of
target amount
Base
compensation
Base
compensation
Bonus: 0 – 200%
add. + 20%
adjustment
Long-term stock-based compensation
> Target parameter: stock price
compared to 5 competitors
> Variability: 0 – 200%
Variable compensation (Bonus)
> 3 targets – one-third each
> Variability: 0 – 200%
add. ± 20% adjustment
Target compensation Maximum amounts of compensation Share Ownership Guidelines
President
and CEO:
3 times
base com-
pensation
Base
compensation
Managing
Board
member:
2 times
base com-
pensation
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