Siemens 2015 Annual Report Download - page 43

Combined Management Report 
of pension benefit commitments is determined 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
by the Supervisory Board. If a member of the Managing Board
earned a pension benefit entitlement from the Company before
the BSAV was introduced, a portion of his or her contributions
went toward financing that prior commitment.
Managing Board members are eligible to receive benefits under
the BSAV at the age of  or – in the case of benefit commit-
ments made on or after January ,  – the age of . As a
rule, the accrued pension benefit balance is paid out to Manag-
ing Board members in twelve annual installments. A Managing
Board member or his or her surviving dependents may also re-
quest that his or her pension benefit balance be paid out in
fewer installments or as a lump sum, subject to the Company’s
consent. The accrued pension benefit balance may also be paid
out as a pension. As a further alternative, Managing Board
members may choose to combine pension payments with pay-
ments in one to twelve installments. If the pension option is
chosen, a decision must be made as to whether the payout
should include pensions for surviving dependents. If a member
of the Managing Board dies while receiving a pension, benefits
will be paid to his or her surviving dependents if the member
has chosen such benefits. The Company will then provide a
limited-term pension to surviving children until they reach the
age of  or, in the case of benefit commitments made on or
after January , , until they reach the age of .
Benefits from the retirement benefit system that was in place
before the BSAV was established are normally granted as pen-
sion benefits with a surviving dependent’s pension. In this case
also, payout in installments or a lump sum payment may be
chosen instead of pension payments.
Managing Board members who were employed by the Company
on or before September , , are entitled to receive transi-
tion payments for the first six months after retirement, equal to
the difference between their final base compensation and the
retirement benefits payable under the corporate pension plan.
Commitments in connection with the termination
of Managing Board membership
Managing Board employment contracts provide for a compen-
satory payment if membership on the Managing Board is termi-
nated prematurely by mutual agreement and without serious
cause. The amount of this payment must not exceed the value
of two years’ compensation and compensate no more than the
remaining term of the contract (cap). The amount of the com-
pensatory payment is calculated on the basis of base compen-
sation, together with the variable compensation and the long-
term stock-based compensation actually received during the
last fiscal 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 Managing Board member received in the
previous year and on the remaining term of his or her appoint-
ment, but is limited to not more than two years’ contributions
(cap). The above benefits are not paid if an amicable termina-
tion 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 a Managing Board member’s position – for example,
due to a change in corporate strategy or a change in the Man-
aging Board member’s duties and responsibilities – the Manag-
ing Board member has the right to terminate his or her contract
with the Company. 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 in-
fluence or if Siemens AG becomes a dependent enterprise as a
result of entering into an intercompany 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 exer-
cised, the Managing Board member is entitled to a severance
payment in the amount of not more than two years’ compensa-
tion. The calculation of the annual compensation will include
not only the base compensation and the target amount for the
Bonus, but also the target amount for Stock Awards, in each
case based on the most recent fiscal year completed prior to
the termination of the member’s contract. The stock-based
components for which a firm commitment already exists will
remain unaffected. There is no entitlement to a severance pay-
ment if the Managing Board member receives benefits 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.
Compensatory or severance payments also cover non-mone-
tary benefits by including an amount of  % of the total com-
pensation or severance amount. Compensatory or severance
payments will be reduced by  % as a lump-sum allowance for
discounted values and for income earned elsewhere. However,
this reduction will apply only to the portion of the compensa-
tory or severance payment that was calculated without taking
into account the first six months of the remaining term of the
Managing Board member’s employment contract.