The remuneration of the members of the Managing Board of Siemens is based on the Company’s size and global presence, its economic and financial position, and the level and structure of managing board compensation paid by peer companies. In addition, the compensation reflects each Managing Board member’s responsibilities and performance. The level of Board compensation is designed to be competitive in the market for highly qualified executives and to provide incentives for successful work.

In fiscal year 2008, the Managing Board remuneration had four components: (i) a fixed annual salary, (ii) a variable bonus which the Chairman’s Committee may adjust upward or downward by up to 20 percent of the amount of target attainment, (iii) stock-based compensation, and (iv) a pension benefit contribution. With regard to fixed salary and bonus, a target annual compensation is determined, consisting of 50% fixed and 50% variable components. The target compensation is reviewed every two to three years on the basis of an analysis of the compensation paid by peer companies to their top managers. The last review was conducted as of April 1, 2006.

In fiscal year 2008, the remuneration of the Managing Board members was composed as follows:

On July 29, 2008, the Supervisory Board amended the Managing Board compensation system, effective October 1, 2008, by combining the former variable compensation components, i.e. annual bonus and long-term bonus, into a single bonus. The target amount of the new bonus corresponds to 100 percent of the fixed compensation (base salary).

As of fiscal year 2009, members of the Managing Board may participate in the new Share Matching Plan that will be available to all employees of Siemens worldwide over the medium term. Managing Board members participating in the Share Matching Plan are entitled to invest up to 50 percent of the annual gross bonus payable to them in Siemens shares. After expiration of a three-year holding period, each plan participant will receive one free matching share of Siemens stock for every three Siemens shares acquired and continuously held under the Plan. Furthermore, the members of the Managing Board are entitled to participate in the Company’s new Base Share Program replacing the former Employee Share Purchase Program.

Under the uniform Share Ownership Guidelines applicable worldwide within the Company, from 2012 on the members of the Managing Board are required to hold Siemens shares equal to a multiple of their base salary (300 percent in the case of the President and CEO, 200 percent in the case of Managing Board members).

Managing Board contracts concluded on or after June 1, 2007 provide for a compensation payment on premature resignation from office without serious cause, the amount of which must not exceed the value of two years’ compensation (severance payment cap).

In the event of a change of control – i.e. 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 enterprise contract within the meaning of § 291 of the German Stock Corporation Act (AktG), or if Siemens AG is to be merged into an existing corporation or other entity – any member of the Managing Board has the right to terminate the contract of employment if such change of control results in a substantial change in position (e.g. due to a change in corporate strategy or a change in the Managing Board member’s duties and responsibilities). If this right of termination is exercised, the Managing Board member is entitled to receive a severance payment which amounts to the target annual compensation applicable at the time of contract termination for the remaining contractual term of office, but at least for a period of three years. In addition, non-monetary benefits are settled by a cash payment equal to five percent of the severance payment. The stock-based components of compensation for which a firm commitment exists will remain unaffected. Stock options may, alternatively, also be exercised at the time of employment contract termination. No severance payments are made if the Managing Board member receives benefits from third parties in connection with a change of control. A right of termination does not exist if the change of control occurs within a period of twelve (12) months prior to a Managing Board member’s retirement. When signing or extending existing Managing Board contracts in the future, the Company intends to limit severance payments resulting from a change of control to the amount recommended by the German Corporate Governance Code.

On November 12, 2008, the Chairman’s Committee of the Supervisory Board determined the values of stock awards and the bonus awards to be granted, after assessing the attainment of the targets set at the start of the fiscal year.

For fiscal year 2008, the aggregate cash compensation amounted to €25.9 million (2007: €33.2 million) and total remuneration amounted to €36.4 million (2007: €41.7 million), representing a decrease in total remuneration of 12.7 percent.

The following compensation was determined for the members of the Managing Board for fiscal year 2008 (individual disclosure), see table.

Compensation of Managing Board members

Rudi Lamprecht, Eduardo Montes, Dr. Uriel J. Sharef and Prof. Dr. Klaus Wucherer agreed to an early mutual termination of their assignment and employment contracts effective December 31, 2007. Mr. Montes received severance pay in the amount of €6.12 million, and Mr. Lamprecht, Dr. Sharef and Prof. Dr. Wucherer each received €3.372 million. The amount and the composition of each severance payment was determined primarily on the basis of the full remaining term of the terminated employment contract and in consideration for the variable and the stock-based compensation components provided for in the contract. Of the amounts involved, €1.872 million, or €3.12 million in the case of Mr. Montes, relate to the settlement of bonus payments, and €1.5 million, or €3.0 million in the case of Mr. Montes, to the settlement of stock-based compensation. It was agreed in each case to perform a recalculation of the severance payments due to Managing Board members after the close of the fiscal year on the basis of the actual degrees of target achievement, which may result in a payment claim or a refund obligation on the part of the Managing Board member concerned vis-à-vis the Company. On November 12, 2008, the Chairman‘s Committee of the Supervisory Board resolved, in view of the damage claims asserted against former Managing Board members, to exercise a right of lien or retention on payments in satisfaction of valid claims by Mr. Lamprecht, Dr. Sharef and Prof. Dr. Wucherer with regard to fiscal year 2008.

In settlement of their respective contractual entitlement to transitional payments, Mr. Lamprecht received €1.56 million, and Dr. Sharef and Prof. Dr. Wucherer each received €1.872 million.

In addition, consulting agreements were signed under which Mr. Lamprecht, Mr. Montes, Dr. Sharef and Prof. Dr. Wucherer, after leaving the Managing Board, are to provide consulting services to the Company for a monthly consulting fee of €78,000 each (Mr. Lamprecht, Dr. Sharef and Prof. Dr. Wucherer) and €65,000 (Mr. Montes), respectively, in particular on the integration of the former operating Groups for which they had been responsible into the new Sector structure, and to cooperate and assist in the transition of existing business contacts to their respective successors.

During the term of their consulting agreements, Mr. Lamprecht, Mr. Montes, Dr. Sharef and Prof. Dr. Wucherer are entitled to contributions to their respective Siemens Defined Contribution Benefit Plan (BSAV).

The existing consulting agreement with Mr. Montes runs until October 31, 2011. The consulting agreement entered into with Dr. Sharef was terminated as of September 30, 2008, while the consulting agreements with Prof. Dr. Wucherer and Mr. Lamprecht were terminated as of December 31, 2008 and March 31, 2009, respectively.

With regard to his mutually agreed early resignation from the Managing Board, Prof. Dr. Erich R. Reinhardt’s contract of employment was replaced by a service agreement expiring on March 31, 2011 providing for a target annual compensation in the amount of €1.56 million. Prof. Dr. Reinhardt will continue to serve the Company in a consultative capacity.

The following table describes the details of cash compensation on an individual basis:

Details of cash compensation

To compensate him for short-term and long-term pecuniary disadvantages arising as a result of his change from GE Healthcare, United Kingdom, to Siemens AG, Peter Y. Solmssen was promised a total amount of €10.518 million. It was agreed with Mr. Solmssen that the Company will add this amount to his Siemens Defined Contribution Benefit Plan (BSAV) in January 2009.

Both the number of units and the values of the stock-based compensation components are shown in the following table. The stock awards were recorded at the market price of the Siemens stock on the date of commitment less the present value of dividends expected during the waiting period, because stock awards are not eligible to receive dividends. The resulting value amounted to €37.65 (2007: €97.94).

Accordingly, stock-based compensation was as follows:

Stock-based compensation

The following tables contain information concerning the stock awards and stock options held by members of the Managing Board that were components of the stock-based compensation in fiscal year 2008 and prior years. The stock options were issued in fiscal years 1999 through 2005 under the terms and conditions of the 1999 and 2001 Siemens Stock Option Plans approved by the Annual Shareholders’ Meetings on February 18, 1999 and February 22, 2001 (for details on the Siemens Stock Option Plans see Note 34 of the Notes to Consolidated Financial Statements).

Stock awards held by members of the Managing Board

Stock options held by members of the Managing Board (I)

Stock options held by members of the Managing Board (II)

Stock options exercised in fiscal year 2008

Pension benefit commitments – The amount of the contributions to the Siemens Defined Contribution Benefit Plan (BSAV) is determined annually by the Chairman’s Committee of the Supervisory Board. The contributions under the BSAV are added to the personal pension account each January following the close of the fiscal year, with value date on January 1. Until the beneficiary’s time of retirement, the pension account is credited on January 1 each year with an annual interest payment (guaranteed interest).

For fiscal year 2008, the members of the Managing Board were granted contributions under the BSAV totaling €15.1 million (2007: €13.6 million), based on a resolution adopted by the Chairman’s Committee of the Supervisory Board on November 12, 2008. Of this amount, €0.2 million (2007: €0.7 million) relates to funding of pension commitments earned prior to transfer to the BSAV and the remaining €14.9 million (2007: €12.9 million) to contributions granted under the BSAV.

The following table shows on an individual basis, among other things, the contributions (additions) under the BSAV attributable to the members of the Managing Board for fiscal year 2008.

Contributions under the BSAV attributable to the members of the Managing Board

The defined benefit obligation (DBO) of all pension commitments to members of the Managing Board as of September 30, 2008 amounted to €27.6 million (2007: €46.0 million), which amount is included in Note 24 of the Notes to Consolidated Financial Statements.

Former members of the Managing Board and their surviving dependents received emoluments within the meaning of § 314 (1), no. 6 b of the HGB totaling €22.7 million (2007: €16.0 million) for the year ended September 30, 2008.

The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving dependents as of September 30, 2008 amounted to €146.0 million (2007: €134.8 million), which amount is included in Note 24 of the Notes to Consolidated Financial Statements.

Other – No loans from the Company are provided to members of the Managing Board.