Siemens 2015 Annual Report Download - page 58

Combined Management Report
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the counterparty a right of termination if a third party acquires
beneficial ownership of equity securities that enable it to elect a
majority of Siemens AG’s Supervisory Board or otherwise acquire
the power to control Siemens AG’s material policy- making deci-
sions and if the creditworthiness of Siemens AG is materially
weaker than it was immediately prior to such an event. In ei-
ther situation, ISDA Agreements are designed such that upon
termination all outstanding payment claims documented un-
der them are to be netted.
In February , Siemens issued bonds with warrant units
with a volume of US$  billion. Siemens exchanged the major
part of the warrants issued in  against new warrants in
September . In case of a change of control, the terms and
conditions of each warrant enable their holders to receive a
higher number of Siemens shares in accordance with an ad-
justed strike price if they exercise their option rights within a
certain period of time after the change of control. This period
of time shall end either () not less than  days and no more
than  days after publication of the notice of the issuer re-
garding the change of control, as determined by the issuer or
()  days after the change of control first becomes publicly
known. The strike price adjustment decreases depending on
the remaining term of the warrants and is determined in detail
in the terms and conditions of the warrants. In this context, a
change of control occurs if control of Siemens AG is acquired
by a person or by persons acting in concert.
A.11.6 Compensation agreements with
members of the Managing Board or
employees in the event of a takeover bid
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member’s duties and responsibilities), the
member of the Managing Board has the right to terminate his
or her contract with the Company for good cause. A change of
control exists if one or several shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling influence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an intercom-
pany agreement within the meaning of Section  of the Ger-
man Stock Corporation Act, or if Siemens AG is to be merged
into an existing corporation or other entity. If this right of ter-
mination is exercised, the Managing Board member is entitled
to a severance payment in the amount of no more than two
years’ compensation. The calculation of the annual compensa-
tion includes not only the base compensation and the target
amount for the bonus, but also the target amount for the stock
awards, in each case based on the most recent completed fiscal
year prior to termination of the contract. The stock-based com-
pensation components for which a firm commitment already
exists will remain unaffected. Additionally, the severance pay-
ments cover non-monetary benefits by including an amount of
 % of the total severance amount. 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 severance payment that was
calculated without taking account of the first six months of the
remaining term of the Managing Board member’s contract.
There is no entitlement to a severance payment if the Manag-
ing Board member receives benefits from third parties in con-
nection with a change of control. A right to terminate the con-
tract does not exist if the change of control occurs within a
period of twelve months prior to a Managing Board member’s
retirement.
A.11.7 Other takeover-relevant
information
We are not aware of, nor have we during the last fiscal year
been notified of, any shareholder directly or indirectly holding
 % or more of the voting rights. There are no shares with spe-
cial rights conferring powers of control. Shares of stock issued
by Siemens AG to employees under its employee share pro-
gram and / or as share-based compensation are transferred di-
rectly to the employees. The beneficiary employees who hold
shares of employee stock may exercise their control rights in
the same way as any other shareholder directly in accordance
with applicable laws and the Articles of Association.