Governance

Rules governing the operation of Soitec’s Board of Directors

Soitec’s Board of Directors currently counts five members, only one of whom holds an executive position at the company. Three of the Board’s members are independent directors as defined by AFEP-MEDEF governance recommendations (AFEP is an association of France’s top listed companies; MEDEF is the country’s leading federation of employers). Directors’ terms are currently being cut back to four years, starting with the 2010 renewal of Douglas Dunn and Joseph Martin as members of the Board. The new term limit will also apply to future renewals or if any new directors are nominated.

Compensation of corporate officers and directors’ fees

The Board of Directors sets the company’s business strategy and ensures that it is implemented. The Board also determines corporate officers’ annual compensation, which consists of a fixed amount plus a performance-based incentive package that includes a variable bonus and the allocation of financial instruments.

Directors’ fees (for non-executive directors) are determined at Soitec’s annual shareholders’ meeting. Directors’ fees were capped at €250,000 per fiscal year effective on April 1, 2010.

Evaluation of Board operations

The Board of Directors meets six times per year on average and bases its discussions and decisions on the work of the Strategy Committee, the Audit Committee, and the Compensation, Benefits, and Nominating Committee.

In 2010 Soitec set up a process to evaluate the proper functioning of the Board of Directors. Each director received a questionnaire based on the AFEP model and designed to ensure that all items on the agenda are adequately prepared, that the directors have all of the relevant information they need, and that issues are discussed in an acceptable manner. The evaluation confirmed that the Board of Directors and its Committees are functioning as intended.

Rules governing the Board of Directors and its Committees

The Board of Directors and the Committees operate according to a set of rules that are updated regularly. The rules outline Board and Committee operations and set forth the directors’ principal obligations.