Siemens 2011 Annual Report Download - page 137

51 C. Combined management’s discussion and analysis 273 E. Additional information 153 D. Consolidated Financial Statements

In fiscal , the remuneration system for the Managing
Board had the following components:
Base compensation
Base compensation is paid as a monthly salary. The base com-
pensation of President and CEO Peter Löscher was set at the
time of his appointment on July , , and has remained es-
sentially unchanged since then. The base compensation of
the other members of the Managing Board was most recently
revised on October , , from €, to €, per
year.
Variable compensation component (bonus)
The variable compensation component (bonus) is based on
the Company ’s business performance in the past fiscal year.
For a % target attainment (target amount) the amount of
the bonus equals the amount of base compensation. The tar-
gets are derived from One Siemens, our target system for sus-
tainably enhancing corporate value. On the basis of this sys-
tem, the Supervisory Board at the beginning of each fiscal
year defines unique targets for several parameters: return on
capital employed (ROCE adjusted); free cash flow; and organic
revenue growth at the group level (continuing operations).
These target parameters – in addition to other factors – also
apply to senior executives, with a view to establishing a uni-
form and consistent target system throughout the Company.
In its annual decision on targets and on the relative weighting
of the target parameters, the Supervisory Board in particular
takes into consideration market conditions and Siemens’ com-
petitiveness.
The bonus is subject to a ceiling (cap) of % of the target
amount. If targets are substantially missed, the variable com-
ponent may potentially not be paid at all.
The Supervisory Board is entitled to revise the amount result-
ing from attaining targets, by as much as % upward or
down ward, at its duty-bound discretion (pflichtgemäßes Er-
messen); accordingly, the adjusted bonus payment can be as
much as % of the target amount. In choosing the factors
to be considered in deciding on possible revisions of the bo-
nus payouts (±%), the Supervisory Board takes account of
incentives for sustainable corporate management. In addi-
tion, the revision option may be exercised in special recogni-
tion of Managing Board members’ individual achievements,
if applicable.
The bonus is paid half in cash, and half in the form of non-for-
feitable awards of Siemens stock (Bonus Awards). After a four-
year waiting period, the beneficiary will receive one share of
Siemens stock for each Bonus Award. Instead of the transfer
of Siemens stock, an equivalent cash settlement may be ef-
fected.
Long-term stock-based compensation
Since , long-term stock-based compensation has consist-
ed of a grant of forfeitable stock commitments (Stock Awards).
The beneficiary of a Stock Award will receive one free share of
Siemens stock after a restriction period. Beginning with fiscal
, the restriction period for Stock Awards will end at the
close of the second day after publication of the results of op-
eration in the fourth calendar year after the date of the award.
In the event of target attainment of % the annual target
amount for the fair value of the Stock Awards commitment
will be €. million for the President and CEO, and € million
for the other members of the Managing Board. Beginning
with fiscal , the Supervisory Board has the option of in-
creasing, on an individual basis, the target amount for a mem-
ber of the Managing Board that has been reappointed by as
much as % above the amount of € million, for one fiscal
year at a time; this option is not applicable to the CEO. The op-
tion enables the Supervisory Board to take special account of
the Managing Board member’s individual accomplishments
and experience.
Obligations under Share Ownership Guidelines
1 Percentage of base compensation
200% 1
300% 1
Managing Board members President and CEO