50 Dialog Semiconductor Plc | Annual report and accounts 2012 |  Section 3 | Management and governance Directors’ remuneration report continued Share price: 25% of the award Share ownership guidelines Contract terms Non-executive Directors’ remuneration  Dilution Performance standards for the 2012 award EBIT and revenue Share prices Other long-term incentive schemes This part of the award is banked or lapses  depending on the Dialog share price at the  anniversary date of the award throughout the  three-year holding period. At the end of the  three-year holding period, the banked portion  of the award will vest. This is illustrated in the diagram below:  Vesting is dependent on ongoing employment  with the Company at the time of vesting.  Certain “good leaver” provisions apply. As noted above, as part of the approval for the  EIP given by Shareholders, the Company  undertook to disclose on a retrospective basis,  the annual performance standards that had  been set, together with the level of performance  achieved. This is set out below. The performance standards for these metrics  in 2012 were as follows: EBIT and revenue achieved in 2012 were both  above the exceptional level of performance  in 2012. No awards have been made since then and the  plan has now expired, Details of outstanding  awards under this plan are set out in the table  below, with further details at Note 21 B of the  consolidated financial statements. The Company operates under a general  Shareholder-approved dilution limit of 15% of  issued share capital. This approval stems from a time when the Company was in an early stage  of its turnaround when cash preservation was  key, yet with a need to incentivise employees  with share-based remuneration. The Committee recognises that the Company  has grown to a scale where Shareholders have  an expectation that this limit may need to be reduced over time, with the aim of being  managed within UK corporate  governance norms. Although the Company has not reached the  existing 15% limit, in recognising concerns  expressed last year by some Shareholders, the  Committee has determined, for all awards made  with effect from the approval of this report,  dilution will be managed using an average  annual flow rate of 1% per annum. This means  that the Company will be able to move dilution  towards a rolling 10% in 10 years in a measured  way over time. Shareholders will note that the Company is  seeking approval of a new share plan to operate below executive Director level, which  will include provisions to comply with this  updated approach to dilution. The EIP will also be subject to this new overall flow rate limit for new awards. The Company has in the past operated the  Executives’ Long-Term Incentive Plan (LTIP).  Awards to the CEO were made up to 2010. The share prices (using 30 business day  averages) at the beginning and end of the  performance period were €16.39 and €13.86  respectively, meaning that none of the award  would be banked. The CEO is required to establish and hold a shareholding of at least 100% of salary.  Consistent with the other changes to the annual  bonus and granting of awards under the EIP in 2012, this has been increased to 200% of  salary, and excludes unvested awards from the calculation. The CEO currently complies with this new requirement. The CEO’s contract provides for six months’  notice on either side (which is extendable to 12 months’ notice in the case of a change of control) during which only basic pay and  benefits are payable, and a bonus if he is  employed at year end.  There is no acceleration of bonus on a change  of control. The CEO has no entitlement to a bonus if his employment is terminated before the end of the bonus year unless his  employment is terminated in lieu of notice after 1 October in any year. In this case he is entitled to a pro rata bonus for that year.  Historically, non-executive Directors were paid  their base fee two-thirds in cash and one-third  in market value shares (as nominal price options  as set out on page 51), which had a three-year  holding period under an arrangement approved  by Shareholders. Any additional fees were payable  in cash. Non-executive Directors are not eligible  for incentives, pensions or other benefits. Following feedback from Shareholders and proxy  advisers, it was determined that the way in which  non-executive Directors would be remunerated  would be reviewed. Following this review, it was  determined that, subject to Shareholder approval,  the structure of the non-executive Directors’ fee  structure would change. The proposed change is to pay fees only in cash, consistent with UK  corporate governance norms and no new share grants will be made. The fees paid to non-executive Directors are as follows: Chairman: flat fee of £110,000. Other non-executive Directors: basic fee of £80,000 plus additional fees of £10,000 for chairing the Board Committees, currently the Audit and Remuneration and Nomination  Committees and for 2013 onwards the Strategic  Transaction and Technology Committee. EBIT Revenue  Vesting margin growth  Performance level % % % Threshold 20  10.90  15 Target 40 11.00 25 Exceptional   100  11.76  34 Any remaining options lapse Award granted Exercise period Vested options can be exercised up to  three years after end of holding period Year 3 Year 2 Year 1 Start of  holding period End of  holding period First  measurement point Second measurement point Third measurement point Banked  options vest ¹/ ³  of options banked or lapsed ¹/ ³  of options banked or lapsed ¹/ ³  of options banked or lapsed