As an independent, publicly-listed company, Siemens Energy’s Executive Board compensation follows the requirements of the German Stock Corporation Act (AktG) and implements all relevant recommendations of the German Corporate Governance Code.
The Supervisory Board approved the compensation system explained below with effect from October 1, 2020. It has been implemented in the employment contracts with the respective Executive Board members.
The Transposition Of The Second Shareholder Rights Directive (ARUG II) requires that the compensation system for the Executive Board be presented to shareholders for approval upon every substantial change, at a minimum every four years. The compensation system for members of the Executive Board was approved by the company’s Annual Shareholders’ Meeting on February 10, 2021 with 96.7% of the recorded votes (Say on Pay).
Design of the Executive Board’s compensation
Compensation for the Executive Board should be transparent, easy to understand and set clear incentives for sustainable value creation. Further, the compensation system should support Siemens Energy’s strategy, take account of industry-specific conditions, offer a clear link to both individual and collective performance, and align with compensation for executive management and other employees of the Company.
A strong focus on performance is established by linking the majority of Executive Board members’ compensation to challenging performance targets. In most cases, over 60% of Siemens Energy Executive Board members’ compensation is variable and therefore “at risk”, meaning that it is tied to the attainment of pre-defined targets and can fall to as little as zero. Of variable compensation, a majority is granted in the form of long-term equity-based variable compensation (Stock Awards), which each give the recipient the right to receive one share of Siemens Energy stock after a four-year vesting period, depending on the degree to which targets are attained. This ensures that Executive Board members are rewarded for driving the Company’s sustainable development.
The sections below describe each aspect of the Executive Board’s compensation system in greater detail and give an overview of how the system has been applied for fiscal year 2023. A full description of the compensation system according to the standards set by §87a AktG can be found in the Company’s Notice of Annual Shareholders' Meeting 2021. Disclosures on the compensation of members of the Executive Board in the previous fiscal year can be found in the Compensation Report 2021 which is available for download in the “Compensation Reports” section of the homepage.
Overview of the Compensation System as applied for fiscal year 2023