Dialog Semiconductor Plc (“Dialog” or the “Company”) has implemented the following internationally recognised standards of fair and responsible corporate governance, which are based upon English law and which comply in substance with all recommendations of the German Corporate Governance Code and specific provisions contained therein. In addition, the Company has established internal guidelines protecting against insider trading.
Dialog has adopted and will follow these principles in order to enhance the confidence of shareholders, customers, employees and the general public in the Company. Select a link below to go to each section:
Shareholders and the Annual General Meeting Board of Directors Transparency Reporting and Audit of the Annual Financial Statements
Shareholders exercise their rights through their vote at the annual general meeting of Dialog. Each share carries one vote. There are no shares with multiple voting rights, preferential voting rights (golden shares) or maximum voting rights.
Annual General Meeting
The Board of Directors present the annual financial statements and the consolidated financial statements, director’s reports and report of the independent auditors to the annual general meeting. The annual general meeting approves the payment of any final dividend. It elects directors to the Board of Directors and appoints the independent auditor. The annual general meeting also authorizes the directors to approve the compensation of the auditor and, if applicable, increases shares available under the employee share option scheme.
The general meeting passes any resolution required to amend the Company’s Memorandum and Articles of Association and gives the directors authority to issue new shares from time to time and to purchase its own shares.
When new shares are issued, shareholders, in principle have pre-emptive rights corresponding to their share of the equity capital. This right of pre-emption will not apply if disapplied by the shareholders in general meeting (generally the Company will look to have available for issue shares equal to 5% of the issued share capital to which the rights of pre-emption will not apply) or in respect of shares issued to satisfy employee options or to satisfy the consideration on any acquisition.
Invitation to the Annual General Meeting, Proxies
At least once a year the shareholders' annual general meeting is to be convened by the Board of Directors giving details of the agenda. The Board of Directors shall not only provide the reports and documents, including the annual report, required by law for the general meeting, and send them to shareholders upon request, but shall also publish them on the Company's internet site together with the agenda. Subject to certain requirements specified quorum of shareholders may require that additional resolutions be put to the Annual General Meeting.
The Company shall provide:
The Company shall inform all domestic and foreign shareholders, shareholders' associations and financial advisors, which, in the preceding 12 months have requested such notification, of the convening of the general meeting and, upon request, shall also provide meeting documents (if appropriate by electronic channels).
The Company shall facilitate the personal exercising of shareholders' voting rights. The Company shall also assist the shareholders in the use of proxies. The Board of Directors shall arrange for the appointment of a representative to exercise shareholders' voting rights in accordance with instructions; this representative should also be reachable during the general meeting.
Each shareholder is entitled to participate in the annual general meeting, to take the floor on matters on the agenda and to submit materially relevant questions.
The Company shall publish key information related to the annual general meeting on its website on the day of the annual meeting.
In addition to the Annual General Meeting the directors, or shareholders holding not less than one tenth of the paid-up share capital, may call an extraordinary general meeting.
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The Board of Dialog Semiconductor is committed to maintaining high corporate governance standards to protect the interests of all stakeholders. Our principles that we have complied with in the year, reflect a range of guidelines that apply to the Company, given Dialog’s status as a UK incorporated, Frankfurt Stock Exchange listed company. In this context, the Company, to the extent that is practicable, given its UK incorporation but Frankfurt Stock Exchange listing, applies the main and supporting principles of the relevant governance codes.
Board of Directors – role and responsibilities
As Dialog is incorporated in the UK and uses the UK Corporate Governance Code as a basis for its corporate governance practice, it maintains a single board structure. The Board has overall responsibility for the leadership, control and oversight of the Company. The day-to-day responsibility for the management of the Company has been delegated by the Board to the Chief Executive Officer, who is accountable to the Board. The Chief Executive Officer executes this authority through an executive management team. In addition, a number of responsibilities of the Board are delegated to sub-committees of the Board; details of which are set out below.
Matters reserved for the Board
While the Board has delegated day-to-day responsibility for the management of the Company to the Chief Executive Officer, certain matters are formally reserved for the Board. The Board has overall responsibility for Company objectives, strategy, annual budgets, risk management, acquisitions or major capital projects, remuneration policy and corporate governance. It defines the roles and responsibilities of the Chairman, Chief Executive, other Directors and the Board sub-committees. In addition, the Board approves the quarterly financial statements and reviews the Company’s systems of internal control. It approves all resolutions and related documentation put before Shareholders at general meetings.
Mr Gregorio Reyes is Chairman of the Board. The Chairman was determined by the Board to be independent on his appointment to the Board. The Chairman is responsible for the effective working of the Board while the Chief Executive Officer (CEO), together with the executive management team, is responsible for the day-to-day running of the Company. The functions of Chairman and CEO are not combined and both roles’ responsibilities are clearly divided.
The Chairman, CEO and the Company Secretary work together in planning a forward programme of Board meetings and meeting agendas. As part of this process, the Chairman ensures that the Board is supplied, in a timely manner, with information in a form and of a quality to enable it to discharge its duties. The Chairman encourages openness, debate and challenge at Board meetings. The Chairman holds a number of other directorships and the Board considers that these do not interfere with the discharge of his duties to the Company.
The Chairman is available to meet Shareholders on request.
The Board currently comprises ten Directors. The Directors who served on the Board during the 2012 calendar year are listed below. Subsequent to the year end, Richard Beyer and Mike Cannon have been appointed to the Board as independent, non-executive Directors. Detail on their recruitment is set out below:
The Board of Directors comprises a mix of the necessary skills, knowledge and experience required to provide leadership, control and oversight of the management of the Company and to contribute to the development and implementation of the Company’s strategy. In particular, the Board combines a Group of Directors with diverse backgrounds within the technology sector, in both public and private companies, which combine to provide the Board with a rich resource and expertise to drive the continuing development of Dialog and advance the Company’s commercial objectives. In addition, the geographic background of the Board is diverse and it includes Directors who reside, and have worked in, North America, Europe and Asia.
Board refreshment and renewal
The Board is committed to a policy of ongoing Board refreshment and renewal. The Remuneration and Nomination Committee continually reviews the composition and diversity of the Board, including gender diversity, and the skills and experience of each of the Directors. The relevant skills and experience of each Director are set out under individual Director biographies.
Subject to approval at the Annual General Meeting by Shareholders, Directors are appointed for a term of three years, except for John McMonigall who, given his length of tenure on the Board, is appointed for a one-year term and subject to annual re-election. The standard terms of the letter of appointment of non-executive Directors are available, on request, from the Company Secretary.
Directors seeking re-election are subject to a performance appraisal, which is overseen by the Remuneration and Nomination Committee.
In accordance with its Articles of Association a third of Directors stand for re-election at each Annual General Meeting.
Consistent with a commitment to ongoing Board refreshment and renewal, Chang-Bun Yoon was appointed to the Board on 24 April 2012. An external recruitment consultant was used in the process of recruitment of Chang-Bun Yoon to the Board.
During the year, Peter Tan stepped down from the Board.
During 2012, the Remuneration and Nomination Committee engaged in a process to recruit two new independent non-executive Directors to the Board. The primary objective was to appoint Directors who would bring specific industry experience to the Board. An additional objective was to recruit Directors who had experience serving on the Boards of publicly listed companies. Candidates were identified through a variety of methods. The Remuneration and Nomination Committee engaged external search and recruitment agents, Russell Reynolds, to identify potential candidates and to assist in selecting and recommending candidates. Informal industry contacts were also used. The Committee, which is committed to achieving a greater level of gender diversity on the Board over time, made considerable effort to ensure that gender was a significant consideration factor in the identification of potential candidates in addition to relevant industry and public company board experience.
Following a thorough review process, candidates met with Remuneration and Nomination Committee members and the Chairman prior to appointment. Richard Beyer and Mike Cannon have been appointed to the Board on the strength of their experience and skills and the value they can bring to the Board of Directors as a whole for the benefit of all Dialog Shareholders.
At the end of 2012, the Board comprised eight Directors: one executive Director, and seven independent, non-executive Directors (including the Chairman). Following the appointment of Richard Beyer and Mike Cannon to the Board, the Board now comprises ten Directors. The Remuneration and Nomination Committee has reviewed the size and performance of the Board during the year and also considered the impact of the addition of two new independent Directors on the effective functioning of the Board. A Board of ten Directors, the maximum which is currently allowed under the Company’s Articles of Association, is a size that functions effectively, comprises the skills, knowledge and experience required by Dialog, is not so large as to be unwieldy and meets corporate governance best practice guidelines on independence.
Corporate Governance best practice states that at least half the Board, excluding the Chairman, should comprise non-executive Directors determined by the Board to be independent.
The Company has determined that Chris Burke, Richard Beyer, Mike Cannon, Aidan Hughes, John McMonigall, Russ Shaw, Peter Weber and Chang-Bun Yoon are independent. The Chairman, Gregorio Reyes, was independent on his appointment to the Board. The Company’s Chief Executive Officer, Dr Jalal Bagherli, is the only executive Director on the Board.
Excluding the Chairman, and following the appointment of Richard Beyer and Mike Cannon, the Board now comprises eight independent non-executive Directors and one executive Director and is compliant with the principle that at least half the Board, excluding the Chairman, should comprise Directors determined by the Board to be independent.
As part of its annual review, the Board specifically considered the independence of Mr John McMonigall, given his tenure on the Board. When assessing the potential impact of tenure on any Director’s independence, the Board views the issue of concurrency with executive Directors as central to that process. The Board’s unanimous view is that Mr McMonigall’s independence and objectivity, as evidenced by his continuing valuable contribution at Board meetings, is in no way compromised by his length of tenure on the Board. The Board also believes that his industry experience and contribution to the continuing development of Dialog is of significant benefit to the Board as a whole.
While the Board is satisfied that Mr McMonigall is wholly independent, in line with the best practice principles, as he has been a member of the Board for in excess of nine years, he is subject to annual re-election by Shareholders.
Senior Independent Director
The Board has appointed John McMonigall as Senior Independent Director. He is available to Shareholders who have concerns for which contact through the normal channels of Chairman or Chief Executive Officer has failed to resolve or for which such contact is inappropriate. He is available to meet Shareholders on request.
Aidan Hughes, Chairman of the Audit Committee, Russ Shaw, Chairman of the Remuneration and Nomination Committee and Chris Burke, Chairman of the Strategic Transaction & Technology Committee, are also available to Shareholders should they have specific concerns or issues relevant to their respective Committees.
Audit Committee financial expert
The Board has determined that Aidan Hughes, who chairs the Audit Committee, has recent and relevant financial experience and is the Audit Committee financial expert. He is a qualified chartered accountant, an associate member of the Institute of Chartered Accountants in England and Wales and has significant experience as a senior accountant and Finance Director at a number of public companies.
All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with. The Company Secretary ensures that the Board members receive appropriate induction and ongoing training and development to enable them to discharge their duties. The Company Secretary is also responsible for advising the Board on all corporate governance matters. The appointment and removal of the Company Secretary is a matter for the Board.
The Board of Directors has established an Audit Committee and has delegated authority to this committee to consider and report to the Board on the Company’s financial reporting, internal control and risk management procedures and the work of the internal and external auditors.
The Audit Committee comprises only independent, non-executive Directors. The members during the year were Aidan Hughes (Chairman), John McMonigall and Peter Tan. Mr Tan ceased to be a member of the Committee upon his resignation as a Director on 24 April 2012. Chang-Bun Yoon joined the Committee on 18 July 2012. The Board has determined that Aidan Hughes has recent and relevant financial experience and is the Audit Committee financial expert. He is a qualified chartered accountant, an associate member of the Institute of Chartered Accountants in England and Wales, and has significant experience as a senior accountant and Finance Director at a number of public companies. The other members of the Audit Committee have a wide range of business experience, which is evidenced by their biographies.
The Audit Committee meets a minimum of four times a year. During 2012, the Committee met five times. The Committee also meets privately with the internal and external auditors and separately with the executive management and executive Director.
The Audit Committee’s main responsibilities include to:
Review and advise the Board on the integrity of the financial statements of the Company, including the annual report, quarterly financial statements and other formal announcements relating to the Company’s financial performance;
Review and advise the Board on the effectiveness of the Company’s internal controls, including its “whistle‑blowing” procedures;
Review the nature and scope of the work performed by the external and internal auditors, the results of their audit work and the response of the management team;
Make recommendations on the appointment and remuneration of external auditors and to monitor their performance and independence;
Approve and monitor the policy for non-audit services provided by the external auditors to ensure that the independence and objectivity of the auditors is not compromised.
In order to fulfil its duties, the Committee receives sufficient, reliable and timely information from the Dialog management team.
The Audit Committee discharged its obligations during the year as follows:
During the year the Committee reviewed the financial statements of the Company, including the annual report, quarterly financial statements and other announcements relating to the Company’s financial performance and received reports from the external auditors setting out the accounting or judgemental areas that required its attention.
The Committee considered reports from internal audit on the operation of, and issues arising from, the Group’s internal control procedures, together with observations from the external auditors and discussions with senior management. In addition, the Committee monitored the effectiveness of the Group’s risk management process.
On occasions the Committee takes a detailed look at specific issues outside of the course of the regular Committee meetings.
Internal audit activities and responsibilities are provided by an in-house internal audit team. An internal audit charter is also in place which outlines the objectives, authority, scope and responsibilities of internal audit.
An internal audit plan is approved by the Committee and the work specified in the plan is designed to monitor the effectiveness of the Group’s system of internal controls.
The ongoing results of the work of the internal audit function are reviewed by the Committee at each meeting and where appropriate issues are brought to the attention of the executive management and the Board.
The Committee is responsible for the development, implementation and monitoring of the Group’s policy on external audit. This policy assigns oversight responsibility for monitoring the independence, objectivity and compliance with ethical and regulatory requirements to the Audit Committee and day-to-day responsibility to the Chief Financial Officer.
The external auditor audits all of the Company’s financial statements. Prior to the Audit Committee proposing the appointment or re-appointment of the external auditor, the proposed auditor provides details of any professional, financial and other relationship which may exist between the auditor and the Company that could call its independence into question. This includes the extent to which other (non-audit) services were performed for the Company in the past year or which are contracted for the following year.
The external auditor has committed to inform the Chairman of the Audit Committee of any grounds for disqualification or impartiality of the auditor occurring during the audit, unless such grounds are eliminated.
The external auditor has committed to report to the Audit Committee, without delay, on all facts and events of importance that should be brought to the attention of the Board of Directors, which come to light during the performance of the audit, including the Company’s financial performance and compliance with the Company’s corporate governance principles.
The external auditor takes part in Audit Committee meetings on the annual and quarterly consolidated financial statements and reports on the essential results of its audit.
External auditor and non-audit work
The Company has a policy in place governing the conduct of non-audit work by the external auditor. Under this policy the auditor is prohibited from performing services where the auditor:
May be required to audit his/her own work;
Would participate in activities that would normally be undertaken by management; or
Is remunerated through a “success fee” structure.
Other than the above, the Company does not impose an automatic ban on the external auditor undertaking non-audit work. The external auditor is permitted to provide non-audit services that are not, or are not perceived to be, in conflict with auditor independence, provided it has the skill, competence and integrity to carry out the work and is considered by the Audit Committee to be the most appropriate to undertake such work in the best interests of the Company. The engagement of the external auditor in non-audit work must be pre-approved by the Audit Committee or entered into pursuant to pre-approved policies and procedures established by the Audit Committee.
Details of the amounts paid to the external auditor during the year for audit and other services are available on page 76 of our 2012 Annual Report. The Audit Committee has adopted a policy that, except in exceptional circumstances with the prior approval of the Audit Committee, non-audit fees paid to the Company’s Auditor should be capped at a maximum of 100% of audit fees in any one year.
During 2012, the non-audit fees paid to the external auditor represented 80% of the audit fee. Fees paid for non-audit services relate to other services pursuant to legislation, taxation services and corporate finance transactions.
The Remuneration and Nomination Committee
The Board as a whole is responsible for setting the Company’s policy on Directors’ remuneration.
The Board of Directors has established a Remuneration and Nomination Committee and has delegated authority to this Committee to determine and recommend to the Board: the salaries and incentive compensation of the Company’s officers; and changes to Board structure, size and composition.
The Committee comprises only independent, non-executive Directors. The members during the year were Russ Shaw (Chair), Chris Burke and Peter Weber. The Committee’s members have no financial interest in the Company other than as shareholders and through the fees paid to them.
By invitation, other members of the Board may attend the Committee’s meetings. The CEO and the Vice President, Human Resources, may also attend by invitation but take no part in discussions or decisions on matters relating to their own remuneration. The Committee is free to seek its own advice free from management as it deems appropriate.
During the year the Committee sought and received general advice relating to remuneration from Towers Watson and PwC, both of whom are signatories to the Remuneration Consultants Group Code of Conduct and any advice was provided in accordance with this code.
During the year the Committee met formally on five occasions, in addition the Committee Chairman held a number of meetings with our advisers.
The Remuneration and Nomination Committee’s main responsibilities include to:
Determine the salaries and incentive compensation of the Company’s officers and the officers of the Company’s subsidiaries;
Provide recommendations for other employees and consultants as appropriate;
Administer the Company’s compensation, stock and benefits plans;
Review the Board structure, size and composition and make recommendations to the Board; and,
Identify and nominate Board candidates for approval by the Board.
The key activities of the Committee during the year were:
Review and address 2011 Annual General Meeting outcomes;
Review and approve Executive Management compensation;
Recruit and appoint non-executive Directors and regularly discuss succession planning;
Appoint new independent remuneration adviser to the Committee (Towers Watson);
Discuss and review senior level talent;
Review, plan and approve CEO remuneration.
Details of 2012 remuneration and Dialog’s remuneration policy are set out in the Director’s remuneration report on page 46 of our 2012 Annual Report.
Strategic Transaction and Technology Committee
The Board of Directors has established a Strategic Transaction and Technology Committee and has delegated authority to this Committee to review, evaluate and make recommendations in relation to strategic transactions (such as acquisitions, disposals or licensing arrangements) and the Company’s technology and the technological market in which it operates.
The Strategic Transaction and Technology Committee comprises only independent, non-executive Directors. The members during the year were Chris Burke (Chair), Aidan Hughes and Peter Weber.
During the year, the Committee reviewed and determined the criteria and focus of the Company in terms of technology enhancement and potential M&A activity.
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Price Sensitive Information
Dialog promptly discloses price sensitive information. Ad-hoc notifications are first sent to the stock exchanges and the Federal Financial Supervisory Authority in Germany (Bundesanstalt für Finanzdienstleistungsaufsicht - BAFin) and then be published via an electronic information system.
The UK Companies Act 2006 requires that if a person becomes directly or indirectly interested in 3% or more of any class of our issued voting shares, they must notify the Company of this interest within two business days. After the 3% threshold is exceeded, such persons must notify us with respect to increases or decreases of 1% or more.
Following notification to us, we will notify BAFin within seven calendar days of any person who increases or decreases their shareholding in the share capital of the Company by 1 per cent or more.
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 5 business days and published without delay, if the total value of such transactions in any 1 year exceeds €5,000, pursuant to and in accordance with section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz).
Dialog has adopted a Code of Dealing in which it complies with the following:
Loans to Director or Senior Executive
The Company will not provide or guarantee any loans to directors or senior executives.
Dialog falls within the scope of the provisions of the German and English Takeovers regulations. The general principle of these regulations are that that all shareholders of the target company are to be treated equally to ensure fair and equal treatment of all shareholders in relation to takeover and merger transactions. Accordingly, any offer must be published in English and German and the Board of Directors must publish sufficient information and advice to enable shareholders to reach a properly informed decision. If appropriate and practical, the Board of Directors should convene an extraordinary General Meeting at which shareholders are able to vote on the takeover offer and on corporate actions.
Under the UK City Code on Takeovers any party or persons acting in concert are required to make a mandatory bid for the whole company if they acquire 30% or more of the Company’s issued share capital.
Dialog will prepare annual and quarterly consolidated financial statements in accordance with generally accepted accounting principles in the United Kingdom and International Financial Reporting Standards. These financial statements are the main information instruments for our shareholders.
Dialog also provides up to date information on the web site at http://www.dialog-semiconductor.com/. Interested parties can download quarterly and annual reports online and register on the homepage to receive latest press releases by email.
The consolidated financial statements will be prepared by the Company and examined by the auditor and Board of Directors. The consolidated financial statements shall be publicly accessible within 60 days of the end of the financial year; interim reports shall be publicly accessible within 30 days of the end of the reporting period.
The independent auditor shall perform an audit of the financial statements.
Prior to the Audit Committee proposing the appointment or re-appointment of the auditor the audit committee shall obtain a statement from the proposed auditor stating whether, and where applicable, which professional, financial and other relationships exist between the auditor on the one hand, and the Company on the other, that could call its independence into question. This statement shall include the extent to which other services were performed for the Company in the past year, especially in the field of consultancy, or which are contracted for the following year.
The Audit Committee shall agree with the auditor that the Chairman of the Audit Committee will be informed immediately of any grounds for disqualification or impartiality of the auditor occurring during the audit, unless such grounds are eliminated.
The Audit Committee shall arrange for the auditor to report to it without delay on all facts and events of importance, that should be brought to the attention of the Board of Directors, which come to light during the performance of the audit.
The Audit Committee shall arrange for the auditor to inform it and/or note in the auditor's report if, during the performance of the audit, the auditor comes across facts which show a misstatement by the Board of Directors on the Company’s Corporate Governance Principles.
The independent auditor takes part in the Audit Committee meetings on the annual and quarterly consolidated financial statements and reports on the essential results of its audit.
For further information please contact:
Head of Investor Relations
T: +44 (0) 1793 756 961 firstname.lastname@example.org
Financial PR/IR Advisers:
FTI Consulting – London
T +44 (0)20 7831 3113 email@example.com
FTI Consulting – Frankfurt
Thomas M. Krammer
T +49 (0)69 9203 7183 firstname.lastname@example.org