SIEMENS. CORPORATE GOVERNANCE STRUCTURE AND PROCEDURES.

For Siemens business a clearly structured and fully implemented corporate governance system is highest priority.
Corporate Governance is the basis for all company’s decision-making and control processes and comprises:
responsible, value-based management and monitoring focused on long-term success;
goal-oriented and efficient cooperation between the Management and Supervisory Boards;
respect for the interests of company’s shareholders and employees;
transparency and responsibility in all company’s entrepreneurial decisions and an appropriate risk management system.
It is important to notion that Siemens AG has some differences from New York Stock Exchange Standards in corporate governance. So, as a company incorporated in Germany, Siemens AG has to primarily comply with the German Stock Corporation Act and the German Codetermination Act and follows the recommendations of the German Corporate Governance Code. Furthermore, Siemens complies with applicable rules and regulations of the markets on which its securities are listed, such as the NYSE, and also voluntarily complies with many of the NYSE requirements that by their terms apply only to U.S. domestic issuers.
The significant differences between Siemens governance practices and those of U.S. domestic NYSE issuers are as follows: 1. two-tier board (described above); 2. independence (in contrast to the NYSE Standards, which require the board to affirmatively determine the independence of the individual directors with reference to specific tests of independence, German law does not require the Supervisory Board to make such affirmative findings on an individual basis); 3. committees (the Supervisory Board of Siemens has combined the functions of a nominating, compensation and corporate governance committee substantially in the Chairman’s Committee and has delegated part of the remaining functions to the Nominating Committee); 4. shareholder approval of equity compensation plans and stock repurchases.
Whether there exists an adequate system of checks and balances
As it was described above, Siemens AG has a different procedures that helps to provide the system of check and balances. This system is provided by control functions of Supervisory Board. The main role six committees play. The Chairman’s Committee performs the collective tasks of a nominating, compensation and corporate governance committee to the extent that the tasks are not performed by the Nominating Committee. The Audit Committee oversees the appropriateness and the effectiveness of the Company’s external and internal accounting processes. The Compliance Committee will deal with the following matters: overseeing the ongoing compliance-related investigations, processing reports by the law firm Debevoise & Plimpton LLP on its independent investigation and review of Siemens’ internal compliance and control systems, and monitoring compliance with legal and regulatory requirements and Company guidelines. The Mediation Committee submits proposals to the Supervisory Board in the event that the Supervisory Board cannot reach the two-thirds majority required to appoint a Managing Board member. The Nominating Committee is responsible for making recommendations to the Supervisory Board’s shareholder representatives on the shareholder candidates for election to the Supervisory Board by the Annual Shareholders’ Meeting.
Changes to structure should be implemented
The present Siemens corporate governance structure is well-balanced. On the course in the last 163 years it was developed under the influence of creating new businesses and units in different countries, but the main standards are determined by German legislation. As a transnational corporation Siemens AG should be more attentive to the control system as wells as audit procedures, because such a multi-national company needs a sustainable management system.
The present difficult situation in world economy requires from all world economy players be more effective. For Siemens AG it could be stated in cost saving in corporate governance.
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