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Non-executive Directors are not eligible to participate in the Company’s bonus or share award schemes. In the past, non-executive Directors were awarded share options. This is no longer the practice at Dialog and no share options will be awarded to non-executive Directors in the future. 

None of the remuneration of the non-executive Directors is performance related. The non- executive Directors’ fees are not pensionable and non-executive Directors are not eligible to join any Company pension plans. Non-executive Directors are reimbursed for their reasonable travel expenses incurred in connection with attending meetings of the Board or related committees. 

The compensation of the executive Director comprises a base salary and variable components. Variable compensation includes an annual bonus linked to, and dependent on, certain business targets as well as long-term incentives. The executive Directors’ remuneration is inclusive of any Director’s fee. Further details are set out on page 46. 

## Share ownership and dealing 

Details of Directors’ shareholdings are set out on page 52. The Company has a policy on dealing in shares that applies to all Directors and senior management. Under this policy, Directors are required to obtain clearance from the Chief Executive Officer (or in the case of the Chief Executive Officer himself, from the Chairman) before dealing. 

Directors and senior management are prohibited from dealing in the Company’s shares during designated close periods and at any other time when the individual is in possession of Inside Information (as defined by the Market Abuse (Directive 2003/6/EC) Regulations). 

Transactions in securities of the Company’s own shares carried out by members of the Board of Directors and of their family members will be reported within five business days and published without delay, if the total value of such transactions in any one year exceeds €5,000, pursuant to and in accordance with section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz). 

## Loans to Directors or senior executives 

The Company will not provide or guarantee any loans to Directors or senior executives. 

## Board sub-committees 

The Board has established three permanent sub-committees to assist in the execution of its responsibilities. These are the: Audit Committee, Remuneration and Nomination 

Committee and Strategic Transaction and Technology Committee. Attendance at meetings held in 2012 are set out in the table on page 42. Ad hoc committees are formed from time to time to deal with specific matters. 

The composition of the Board sub-committees, as at 14 February 2013, was as follows: 

## Audit Committee 

Aidan Hughes (Chair), John McMonigall and Chang-Bun Yoon 

## Remuneration and Nomination Committee 

Russ Shaw (Chair), Chris Burke and Peter Weber 

## Strategic Transaction and Technology Committee 

Chris Burke (Chair), Aidan Hughes and Peter Weber. 

Each of the permanent Board Committees has terms of reference under which authority is delegated to them by the Board. These terms of reference are available on the Company’s website. The Chairman of each sub-committee attends the Annual General Meeting and is available to answer Shareholder questions. 

## Relations with Shareholders 

The Company is committed to ongoing and active communication with its Shareholders. During 2012, the Company appointed a Head of Investor Relations to manage and enhance the dialog between the Company, its Shareholders and the broader financial community. The Company also retains independent advisers in the UK and Germany to help manage communication with both English and German speaking Shareholders. Dialog prepares annual and quarterly consolidated financial statements in accordance with generally accepted accounting principles in accordance with International Financial Reporting Standards. 

The Company maintains an investor relations section on its website. This contains copies of investor presentations and annual reports as well as providing other financial statements and corporate press releases. 

There is regular discussion between Company management and analysts, brokers and institutional Shareholders, ensuring that the market is appropriately informed on business activities. Dialog promptly discloses price sensitive information to all market participants. Notifications are first sent to the Frankfurt Stock Exchange and the Federal Financial Supervisory Authority in Germany (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) and then published via an electronic information system. 

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## Significant Shareholders 

Under UK Disclosure and Transparency Rules, significant Shareholders are required to notify Dialog of a shareholding of 3% or more. Dialog must then notify BaFin and the Stock Exchange. Under S.15a of the German Securities Trading Act (Wertpapierhandelgesetz) transactions in the Company’s shares carried out by members of the Board of Directors and their family members are reported and published without delay. 

Dialog’s shares are listed with Clearstream Germany as legal owner. As far as the Company is aware, based on TR-1 notifications received, those holding a significant beneficial interest (>3%) in our Company as of 28 February 2013 were: 

Kleinwort Benson (Jersey) Trustees (2011) Limited as Trustee of the Dialog Semiconductor plc Employee Benefit Trust (3.9%); Deutsche Bank AG (8.1%). For shares held on behalf of discretionary client, see page 9. 

## Internal control and risk management 

In accordance with the EU Transparency Directive (DTR 7.2.5), the Board of Directors and Audit Committee acknowledge that they are responsible for the Company’s process of internal control and risk management and for reviewing its continuing effectiveness. Such processes are designed to manage rather than eliminate the risk of failure and can only provide reasonable and not absolute assurance against material misstatement or loss. 

The Board ensures, to the extent possible, that the system of internal procedures and controls is appropriate to the nature and scale of the Company’s activities and that appropriate processes and controls are in place to effectively manage and mitigate strategic, operational, financial and other risks facing the Company. A detailed list of risks and their management is set out on pages 27 to 29. 

The Company has an ongoing process of identifying, evaluating and managing risk. This process is reviewed in accordance with the EU Transparency Directive. The process was in place during 2012 and up to the date of the approval of the 2012 Annual Report and Financial Statements. The Board and Audit Committee can confirm that necessary actions are being undertaken to remedy any perceived failings or weakness identified from these ongoing process reviews. 

