Compensation, Shareholdings and Loans

 The Board of Directors determines the compensation of the members of the Board of Directors and the Management Board upon recommendation of the Nomination and Compensation Committee. The compensation shall be determined in such a way that it represents an appropriate salary which encourages performance-oriented working. The option plan shall give long-term incentives and support an increase of the share price. The options allocated are only of value if the share price increases and exceeds the exercise price during the vesting period.

The members of the Board of Directors receive a compensation fixed by the Board of Directors in accordance with their involvement and their responsibility, i.e. the Chairman receives a higher compensation than the Board members. The compensation is comprised of a fixed Board member fee in cash and may include, from time to time, options to acquire registered shares in the Company according to the Company's stock option plan (for a description of the major terms of the stock option plan please refer to the section on convertible bonds and options). For additional activities of Board members within the Micronas Group, for example as a Board committee member or as a member of a Supervisory Board of a Group company, no separate compensation is paid. No special meeting attendance fee is paid to the Board members.

In determining the compensation of the members of the Management Board, their tasks and performance as well as business and market developments are considered. The compensation is comprised of the salary (fixed component), a bonus (variable short-term component), a discretionary special bonus (only for members of the Micronas Group Management) and, from time to time, options (variable long-term component) to acquire registered shares in the Company according to the Company's stock option plan (for a description of the terms of the stock option plan please refer to the section on convertible bonds and options). The salary, the bonus and the special bonus are paid in cash.

The payment of the bonus to the members of the Micronas Group Management is dependent on the achievement of certain budgeted figures, currently EBIT and liquidity. Such targets are set before the start of the business year in question. As a consideration for the fulfillment of special targets to be defined by the Board of Directors before the start of the respective business year, such as design wins, year-end cash level or special measures, a discretionary special bonus may be awarded. Overall, the amount of the bonus component (bonus plus special bonus) equals about the amount of the fixed component provided the maximum bonus and special bonus is earned.

The payment of the bonus to the members of the Group Managing Board is dependent on the achievement of firm-wide objectives (2/3) on the one hand and personal objectives (1/3) on the other hand. On a firm level, the achievement of certain budgeted figures, currently EBIT and liquidity, is relevant. The personal objectives depend on the function and duties of the respective member. All targets are set before the start of the business year in question. Overall, the amount of the bonus component is about 2/3 of the amount of the fixed component provided the maximum bonus is earned.

There is currently no provision setting forth a particular severance payment in the event of a termination of the mandate or employment contract of a member of the Board of Directors or the Management Board.

For further information regarding the compensation in accordance with the provisions of Art. 663b^bis and Art. 663c para. 3 of the Swiss Code of Obligations, including fringe benefits such as the use of a company car, as well as share ownership/options please refer to pages 88 to 90 of the Financial Report 2011.