96 Dialog Semiconductor Plc | Annual report and accounts 2012  |  Section 4 | Consolidated financial statements and notes Notes to the consolidated financial statements For the year ended 31 December 2012  21. Share-based payments continued  Continuity of Employment Condition  Corporate Performance Conditions  Under the EIP, up to 0.75% of the issued share capital at the date of grant will be made available for the Remuneration and Nomination Committee to  grant to participants in the EIP on an annual basis. It is envisaged that these shares will be granted to approximately 10 – 15 key executives. A portion  of the total number of shares which can be awarded each year would be reserved for grants to new recruits. However, there is no requirement for the  Remuneration and Nomination Committee to allocate all available shares on an annual basis.  25% of the EIP Award will be banked in equal annual installments (1/3 of 25% each year) based on the achievement of a share price hurdle measured  at the end of each year (Continuity Award). The hurdle is such that the Company’s share price at each measurement point (being the anniversary of the  date of grant – the first grant was on 16 February 2012) must be greater than the higher of the share price on the date of grant or previous  measurement points. Where the share price hurdle has not been achieved at the end of the year, that proportion of the Continuity Award will lapse.  At the end of the three year holding period, the Continuity Award will vest and become exercisable subject to continuity of employment. Individuals  have three years with which to exercise vested options.  75% of any EIP Award will vest subject to the achievement of challenging performance conditions ( Performance Award ). The primary performance  measure relates to EBIT and Revenue Growth targets. The vesting of 50% of the Performance Award relates to EBIT growth with the other 50% relates  to revenue growth targets. The number of shares which vest under the primary performance measure would then be subject to a secondary  performance measure (as set out below). The Company believes that these two measures are directly relevant to the Company’s strategy at its current  stage of development and that the executives should be rewarded on this basis and that focusing on these metrics are critical to driving shareholder  value over the medium to long term. Targets are set on an annual basis, rather than over the long-term, to ensure that they remain challenging and  relevant. These targets take into consideration budget and market expectations for EBIT and revenue growth for the relevant financial year on the  following basis:  Threshold  (e.g. an acceptable level of performance growth which must be attained for an award to begin to vest)  Target  (e.g. the level of performance for achieving budgeted growth and which ensures that the business is online for achieving its long-term objectives) Exceptional  (e.g. the level of performance which is acknowledged by the Remuneration and Nomination Committee as exceptional) At the end of the three year performance period, the Remuneration and Nomination Committee will determine the level of vesting based on the actual  level of growth achieved over the three year period relative to the compounding of the three yearly targets. Provided that the threshold level of growth has been achieved for both targets, at the end of the performance period, the level of vesting for both  metrics will be as follows:  Level of Corporate Performance  % of EIP Award vesting Threshold 1) 20% Target 1) 40% Exceptional 1) $_{ }$  100% [1] Straight-line between points  Where the threshold level of growth has not been achieved for either the EBIT or revenue target the Performance Award will lapse.  Under the secondary performance measure the number of shares vesting at the end of the performance period as determined under the primary  performance measure can be adjusted using a downward multiplier of up to 20% against a customer diversification target.  For example, in measuring customer diversity this could be calibrated as the increase in the regional revenues in key strategic market as a percentage of  total revenues.  The level of vesting of the Performance Award at the end of the three year period will therefore be based on:  Growth in Revenues (50%) + Growth in EBIT (50%) X - 20% Adjustment Factor  The balance of any Performance Award which does not vest in accordance with the above performance conditions will lapse. 