Siemens 2010 Annual Report Download - page 94

6 To our shareholders 21 Corporate Governance
23 Corporate Governance report
29 Corporate Governance statement pursuant to §a
of the German commercial code (HGB) (part of the
Combined management’s discussion and analysis)
30 Compliance report
34 Compensation report (part of Notes to
Consolidated Financial Statements)
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Independence
In contrast to the NYSE Standards, which require the board of
directors to affirmatively determine the independence of the
individual directors with reference to specific tests of indepen-
dence, German law does not require the Supervisory Board to
make such affirmative findings on an individual basis. German
law requires that the Audit Committee must include at least
one independent member of the Supervisory Board who has
knowledge and experience in the application of accounting
principles or the auditing of financial statements. At the same
time, the Bylaws for Siemens’ Supervisory Board contain sev-
eral provisions to help ensure the independence of the Super-
visory Board’s advice and supervision. Furthermore, the mem-
bers of the Supervisory and Managing Boards are strictly inde-
pendent of one another: a member of one board is legally
prohibited from being concurrently active on the other. Super-
visory Board members have independent decision-making
authority and are legally prohibited from following any direc-
tion or instruction. Moreover, Supervisory Board members may
not enter into advisory, service or certain other contracts with
Siemens, unless approved by the Supervisory Board.
Committees
In contrast to the NYSE Standards, which require the creation
of several specified board committees, composed of indepen-
dent directors and operating pursuant to written charters that
set forth their tasks and responsibilities, the Supervisory Board
of Siemens AG has combined the functions of a nominating,
compensation and corporate governance committee substan-
tially in its Chairman’s Committee and has delegated part of
the remaining functions to the Nominating Committee. Never-
theless, certain responsibilities, e.g. determination of the
compensation of the members of the Managing Board, have
not been delegated to a committee because German law re-
quires the Supervisory Board to perform the function in full
session. Both the Audit Committee and the Chairman’s Com-
mittee have written bylaws – adopted by the Supervisory Board
which address their respective tasks and responsibilities. The
NYSE Standards were taken into consideration in drawing up
these bylaws.
The Audit Committee of Siemens AG is subject to the require-
ments of the SOA and the Securities Exchange Act of , as
applicable to a foreign private issuer, and performs – in coop-
eration with the Compliance Committee – functions similar to
those of an audit committee subject to the full NYSE Standards.
Nevertheless, German law precludes certain responsibilities
from being delegated to a committee, such as the selection of
the independent auditors, who are required by German law to
be elected at the shareholders’ meeting.
In addition, the Supervisory Board of Siemens AG has a Finance
and Investment Committee and a Mediation Committee, the
latter of which is required by German law. Neither of these two
committees is required under the NYSE Standards.
Shareholder approval of equity compensation plans;
stock repurchases
The NYSE Standards generally require U.S. domestic compa-
nies listed on the NYSE to obtain shareholder approval of all
equity compensation plans (including stock option plans) and
any material revisions to such plans. Under German law, the
creation of authorized or contingent capital to issue shares
and / or stock options requires the approval by our shareholders.
This includes shareholder approval of the key points of a stock
option plan as part of a decision regarding the creation of a
contingent capital or the repurchase and use of Siemens
shares for servicing the stock option plan.
Under German law, share buybacks generally require the prior
authorization by shareholders. Such approval was last given at
our January ,  Annual Shareholders’ Meeting, and this
matter will generally be voted upon the expiration of each au-
thorization.