ANNUAL REPORT 2004 - ELMOS Semiconductor AG

MANAGEMENT BOARD ELMOS – THE COMPANY THE ELMOS SHARE CORPORATE GOVERNANCE
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Resolute implementation of
the zero defect strategy
Management Board and employees in Dortmund work together in a trusting part-
nership. An employee representative committee with its own statutes represents
the employees’ interests in numerous subcommittees both among each other and
towards the management. There are subcommittees for social issues, human rela-
tions, employee promotion, and economic issues.
Share option programs
The employees’ long-term commitment to the company and stake in the company’s
profits are both achieved by annual share option programs. These programs provide
for the issue of share options to employees below Management Board level and, at
identical conditions, to the Management Board members. As additional prerequisite
to the Management Board members’ share options, a limit (“cap”) to the performance
was introduced with the share option program 2004. Share options for Management
Board members are also variable remuneration components with long-term incen-
tive effect.
By shareholders’ resolution of April 27, 2004 conditional capital up to an amount of
Euro 930,000 is provided for the share option program. In its meeting on December
17, 2004, the Supervisory Board approved the Management Board’s resolution on the
issue of up to 160,000 share options to employees below Management Board level
as well as 40,000 share options to Management Board members, at an issue price of
13.98 Euro. The issue value per option depends on the 10-day average of the official
stock exchange quotation of the ELMOS share price prior to the day of resolution and
an exercise hurdle of ten percent. Options may be exercised after two years at the
soonest, and they are exercisable for the following three years. Options may only be
exercised within certain exercise windows.
In 2004 employees and Management Board members subscribed for 295,722 share
options stemming from the share option program of 2003. As of December 31, 2004
altogether 803,210 share options were outstanding, originating from the programs
of the years 1999 through 2003. So far no options have been exercised.
QUALITY MANAGEMENT
Within the context of continuous improvement processes, ELMOS resolutely imple-
ments its zero defect strategy, achieving an outstanding automotive-suited quality
level. Regular examinations of the tools put to use, following the serial products from
development up to manufacture, constant analyses and statistical procedures make
this high quality level possible. Internal laboratories examine not only possible defect
mechanisms of semiconductor manufacture but also sensor and packaging specific
features.