Compensation system

Total remuneration of the Management Board

The Supervisory Board decides and routinely reviews the remuneration system and the essential contract terms and conditions for the Management Board  members in full session. Total Management Board remuneration comprises a fixed monthly salary, a management bonus, and stock options as well as fringe  benefits and pension benefits. The company does not provide an individualized disclosure of the remuneration with respect to privacy protection. Management Board and Supervisory Board agree that such a disclosure would not contribute to greater transparency in the form of additional information relevant to the capital market. For this reason the Annual General Meeting of May 4, 2010 decided to exempt the company from its legal obligation for individualized disclosure of Management Board remuneration for the period of five years.

In fiscal year 2011, the members of the Management Board received a total fixed remuneration of 1,587 thousand Euro (2010: 1,318 thousand Euro) and variable remuneration of 1,051 thousand Euro (2010: 1,791 thousand Euro). Management Board remuneration comprises fixed components and variable incentive components which are linked to the group’s current earnings before taxes on the one hand and personal, individualized targets, agreed on annually with the Supervisory Board, on the other hand. In the year 2011, 50,000 stock options (2010: 50,000 stock options) of ELMOS Semiconductor AG were issued altogether to the members of the Management Board. The total time value of these options came to 88 thousand Euro at the time they were granted (2010: 112 thousand Euro). There are indirect pension commitments to members of the Management Board of ELMOS Semiconductor AG for which no accruals are required because of the volume of these commitments and risk coverage provided by completely congruent pension plan reinsurance. In the year 2011, contributions to these pension plans amounted to 520 thousand Euro (2010: 341 thousand Euro). They are included in the fixed components of the remuneration.

Remuneration of former Management Board members or their surviving dependants amounted to 268 thousand Euro in fiscal year 2011 (2010: 364 thousand Euro). In addition, insurance premiums of 271 thousand Euro were paid for this group of beneficiaries (2010: 347 thousand Euro). Pension provisions for former  Management Board members or their surviving dependants came to 2,502 thousand Euro as of December 31, 2011 (2010: 2,533 thousand Euro). After setting off pension provisions against the time value of pension plan reinsurance, 364 thousand Euro (2010: 480 thousand Euro) remain as pension provisions and similar obligations altogether recognized for the group.

Apart from pension commitments and compensation agreements in case of a change of control, no additional benefits have been promised to any Management Board member in case of the termination of occupation. Nor did any member of the Management Board receive benefits or corresponding promises from third parties with regard to his position on the Management Board in the past fiscal year.

Total remuneration of the Supervisory Board

The Supervisory Board’s remuneration is determined by Section 9 of the articles of incorporation. The Supervisory Board members receive fixed and variable payments apart from the reimbursement of their expenses. The variable remuneration is linked to the dividend and thus oriented toward the company’s long-term success. 25 percent of the fixed remuneration and 100 percent of the variable remuneration are paid in shares of the company at present. The Supervisory Board members are not granted stock options of ELMOS Semiconductor AG for their positions on the board. The employees’ representatives receive stock options only in the context of their employment with ELMOS Semiconductor AG.

Compliant with the recommendation of the German Corporate Governance Code with respect to Supervisory Board remuneration in consideration of chairmanship and vice chairmanship, the chairman receives twice the amount of the regular fixed payment and the vice chairman receives one and a half times of said amount. The Supervisory Board members’ remuneration is disclosed in summarized form, yet not individualized. This also applies for payments made to Supervisory Board members for individually performed services, particularly consulting and mediation services.

The fixed remuneration paid to members of the Supervisory Board amounted to the total sum of 59 thousand Euro in fiscal year 2011 (2010: 85 thousand Euro). This amount includes expenses and disbursements. Payments of variable remuneration amounted to 89 thousand Euro (2010: 0 thousand Euro). The company paid 23 thousand Euro (2010: 140 thousand Euro) to members of the Supervisory Board for consulting and other services. Directors’ dealings Individuals who hold executive positions with the issuer of stocks and persons closely related to such individuals are obligated by law to disclose the purchase and sale of stock of ELMOS Semiconductor AG in accordance with Section 15a WpHG (Securities Trading Act). All such directors’ dealings are announced immediately upon notification Europe-wide and publicized on the company’s website. For detailed information about directors’ dealings, please refer to the notes to consolidated financial statements (note 38).

As of December 31, 2011, the following members of Management Board and Supervisory Board held ELMOS shares and stock options: