Governance

The Major Board Resolutions

 

Communications between independent directors/ internal/ independent auditors

 

A. The channels of the communications between the independent directors, the internal auditors, and the independent auditors

 

a. Independent directors and accountants meet at least once a quarterly regular meeting. Accountants report on the results of quarterly financial statement reviews or verifications and other communication requirements required by relevant laws and regulations. Communications will be made on whether there are any significant adjustment entries or legal amendments affecting the accounting situation and they also regularly update laws and ordinances to independent directors every year. Independent directors also conduct independent assessments of the services provided by accountants.  If there are major events, a meeting can be convened at any time.

 

b. The head of internal auditor and independent directors meet at least once a quarterly regular meeting to report on the company's internal audit execution status, internal control operations and the execution of Audit Committee Letter; meetings can be convened at any time if there are major events.

 

 

B. The major matters of the communications between the independent directors and the independent auditors

 

The communication between the Audit Committee and the independent auditors works well. The major matters of these communications in 2020 are as follows:

 

Meeting Date Descriptions of the major matters Communication status and implementation results
2020/02/05 The findings of the audits on the Company’s financial results for FY 2019 After review by the Audit Committee, all independent directors have no objections
2020/03/20 The findings of the audits on the Company’s SOX for FY 2019

Report on 20-F financial results
2020/04/29 The findings of the review on the Company’s financial results for the three months ended March 31, 2020
2020/07/29 The findings of the review on the Company’s financial results for the six months ended June 30, 2020
2020/10/28 The findings of the review on the Company’s financial results for the nine months ended September 30, 2020
2020/12/15 2020 annual regulatory update with AUO Audit committee

 

 

C. The major matters of the communications between the independent directors and the internal auditors

 

The communication between the Audit Committee and the internal auditors works well. The major matters of these communications in 2020 are as follows:

 

 Meeting Date Descriptions of the Major Matters Communication status and implementation results
2020/02/05 The findings of the internal audit reports for the fourth quarter of 2019

Statement of Internal Control System for FY 2019
After review or approval by the Audit Committee, all independent directors have no objections
2020/04/29 The findings of the internal audit reports for the first quarter of 2020
2020/07/29 The findings of the internal audit reports for the second quarter of 2020
2020/10/28 The findings of the internal audit reports for the third quarter of 2020

 

 

Date of meeting, agenda, resolutions of Remuneration Committee in 2020

 

Meeting
Date

 Agenda Resolutions and opinions of all members Attendance 
February 5,
2020
Approved the 2019 compensation distributions to directors and senior managerial officers. Approved as proposed and reported to the Board of Directors for resolution. All members have attended to the meeting.
Approved the 2020 Manager Remuneration Policy
Approved the proportion to the appropriation of employees’ and directors' remuneration
Approved the amendments to “compensation policy to the directors and functional committee members”
October 28,
2020
Approved the 2021 Manager Remuneration Policy

 

 

 

The implements of preventing insider trading

The Company has established " Management Procedure for Insider Trading Prevention" to prohibit internal personnel from buying or selling securities by using undisclosed information to the public, and as reference for the Company's handling and disclosure of material information, the Company also reviews the Procedures from time to time to comply with present laws and practical management needs. The Procedures can be found on the Company's website.


The Company will enforce educational promotions pertaining to insider trading preventive management for any new director and senior managers within one month of his/her appointment. In addition, the attendance rate for new employee corporate ethics training courses and the signage rate for declaration of integrity have both reached 100% in 2020. Furthermore, the company also invited the company’s insiders to participate in the “109 Annual Prevention of Insider Trading and Insider Equity Transactions Propaganda Seminar” held by the Stock Exchange in September,2020 and for them to obtain relevant training certificates. The course includes discussion on related rules and preventive practices of insider trading, regulations and practices of insider equity changes, and short-term transaction prevention and practice, to specify implementation of propaganda to prevent insider trading.

 

 

Diversity policy of the members of Board of Directors

Pursuant to the Company's "Corporate Governance Principles," the composition of the Board of Directors should take into consideration the policy of diversity. Directors who serve concurrently as the Company's managers should not exceed one third of all Directors and appropriate diversification guidelines have been established based on Company operations, its business model, and development requirements. These guidelines stipulate that Directors should be assessed by standards including but not limited to the following two aspects:


1. basic qualifications and value: gender and age;
2. Professional knowledge and skills: professional background, competencies, and industry experiences etc.

 

The Company’s management objectives and the goals achieved regarding the diversity policy are listed below:

 

 Management Objectives Goals Achieved
Independent Directors exceeding one-half of the total director seats Achieved
Number of Directors who concurrently serve as Company managers do not exceed one-third of the total director seats Achieved
At least two seats of Directors are females Achieved

 

 

The Company's fulfillment of diversification of members of the Board of Directors in 2020 is as follows:

 

Name Title  Seniority of the Independent Director  Employee Position
Below
3 Yrs
3~9 Yrs Exceed
9 Yrs
Shuang-Lang (Paul) Peng Chairman       V
Kuen-Yao (K.Y.) Lee Director        
Frank Ko Director       V
Peter Chen Director        
Chin-Bing (Philip) Peng Independent Director      
Mei-Yueh Ho Independent Director      V  
Yen-Shiang Shih Independent Director    V    
Yen-Hsueh Su Independent Director      
Jang-Lin (John) Chen Independent Director  V      

Note: Information as of December 31, 2020 

 

Name Title Professional Knowledge and Skills
Industry or Technology Legal, Finance or Accounting
Shuang-Lang (Paul) Peng Chairman  
Kuen-Yao (K.Y.) Lee Director  
Frank Ko Director  
Peter Chen Director  V  
Chin-Bing (Philip) Peng Independent Director  V  V
Mei-Yueh Ho Independent Director  V  
Yen-Shiang Shih Independent Director  V  
Yen-Hsueh Su Independent Director  V V
Jang-Lin (John) Chen Independent Director  V  

Note: Information as of December 31, 2020 

 

Name Title Major Experiences
Technology Industry Finance & Investment Technical Research
Shuang-Lang (Paul) Peng Chairman V    
Kuen-Yao (K.Y.) Lee Director V    
Frank Ko Director V    
Peter Chen Director V    
Chin-Bing (Philip) Peng Independent Director V    
Mei-Yueh Ho Independent Director V V  
Yen-Shiang Shih Independent Director V    
Yen-Hsueh Su Independent Director V V  
Jang-Lin (John) Chen Independent Director V   V

Note: Information as of December 31, 2020 

 

Name Title Gender Age
Below 55 Yrs Old 56~65 Yrs Old 66~75 Yrs Old
Shuang-Lang (Paul) Peng Chairman Male   V  
Kuen-Yao (K.Y.) Lee Director Male     V
Frank Ko Director Male V    
Peter Chen Director Male   V  
Chin-Bing (Philip) Peng Independent Director Male     V
Mei-Yueh Ho Independent Director Female     V
Yen-Shiang Shih Independent Director Male     V
Yen-Hsueh Su Independent Director Female V    
Jang-Lin (John) Chen Independent Director Male     V

Note: Information as of December 31, 2020

 

 

Top 10 Shareholders

 

Top 10 Shareholders (Book Closing Date of Shareholders' Meeting: 2020.4.19)

 

 Shareholders’ Name Holding Shares  Holding % 
Qisda Corporation 663,598,620 6.90
Quanta Computer Inc. 443,930,307 4.61
Trust Holding for Employees of AU Optronics Corp. 440,887,005 4.58
ADR of AU Optronics Corp. 403,249,969 4.19
Fubon Life Insurance Co., Ltd 378,702,000 3.93
Tong Hwei Enterprise Co., Ltd. 151,800,000 1.58
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds 121,423,874 1.26
JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank 93,688,975 0.97
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS 90,859,549 0.94
New Labor Pension Fund 76,073,500 0.79

 

 

Full- (or part-) time unit of Corporate Governance, Corporate Social Responsibility and Ethical Corporate Management

 

Full- (or part-) time unit who sets into action and
the operation and implementation status of the unit
Corporate Governance

Board of directors of the Company has approved to appoint Vice President, Mr. Benjamin Tseng, to serve as chief corporate governance officer to be responsible for the supervision and arrangement of the corporate governance and setting a goal to protect shareholder equity and to enhance the function of the board of directors. Mr. Benjamin Tseng’s qualifications meet the regulations regarding chief corporate governance officer in Paragraph 1 of Article 3-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. His functions and powers include providing information to directors and audit committee for them to execute their jobs and the development of the latest regulations regarding corporate business, assisting directors to comply with the law and periodically reporting the progress of corporate governance to the Corporate Governance Committee and the board of directors every year and so as to handling matters relating to board meetings and shareholders’ meetings according to the laws, producing meeting minutes of board meetings and shareholders’ meetings, assisting directors and the Audit Committee in taking office and continuing education and etc. and which are being executed by the secretary unit of board of directors.


Major implementations of the corporate governance affairs are listed as follows,

 

1. Seven Board of Directors meetings, eight Audit Committee’s meetings and one Corporate Governance Committee’s meeting were convened in 2020.

 

2. One Annual General Shareholders' Meeting was convened in 2020.

 

3. All members of the Board have completed at least six credits of continuing education.

 

4. The Company has filed for liability insurance for its Directors and important employees, and has reported to the board of directors after the insurance had been renewed.

 

5. Performance evaluations of the board of directors, each director and the functional committees have been processed in the fourth quarter of the year. Evaluation results of each assessment are all "Exceeding Expectations".

 

6. The results in the 6th Corporate Governance Evaluation has been ranked among Top 5%.

 

7. The chief corporate governance officer has taken 12 hours training courses.

 

Corporate Social Responsibility

The Company's risk management policies have been approved by the Board of Directors in 2020, and were set to be our supreme guiding principles in controlling risk. In accordance with the risk management standards and guidelines of ISO 31000 and the material principles, the Company has formulated corresponding procedures and systems. Through annual risk evaluation and identification, the Company would develop plans to mitigate, transfer or avoid potential risks, aiming for a solid internal structure, hence achieving sustainable operation.

 

Regarding our policy enforcement framework, the Company has established a risk management team under Corporate Social Responsibility Committee, which is in charge of implementing the policies approved by the Board of Directors. In respect of risk identification, prevention, monitor, or other major risk management topics, the team would report to the Board of Directors at least once a year.

 

The Chief Financial Officer will review the risk identification work. Risk identification is conducted annually by the various units, including product R&D units, the manufacturing and sales units, as well as the units in charge of finance, legal affairs, human resources, information technology, and environmental safety management, from the perspective of corporate sustainability, e.g. financial considerations such as market risk and liquidity risk, and non-financial risks such as regulatory compliance, information security, climate and environmental protection, and social issues. In addition to mitigating the risks, the Company has been seeking opportunities to counter all the said risks.

 

The risk identification process involves a quantitative assessment considering the frequency of occurrence, the degree of impact, and the degree of control. It covers dimensions such as finance, strategy, operation, and disaster. By doing so, we have identified 74 types of risks and prioritized them using the matrix analysis diagram.

 

The Company has assessed the 23 mid-high risk scenarios that we may encounter in 2020. External ones mostly surrounded COVID-19, industry competition and supply chain management; internal parts included information security and technology R&D.

 

Among which, we've chosen strategy and operation as our main focus scopes this year. In regard to our strategy when encountering fiercer industry capacity increase, the Company has been dedicated to its Go Premium and Go vertical direction, so to refrain ourselves from price war. Operation-wise, the pandemic this year has impacted the supply chain, manufacturing and logistics to a large extent. In response, the Company has built up responding procedures by collaborating with related departments within the shortest possible timeframe. Higher flexibility toward process improvement has increased our adaptability to potential impacts, and made the systematic structure more complete at the same time.

 

Ethical Corporate Management

In order to improve the administration of integrity management and establish a corporate culture with integrity management, the company refers to “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”


 "AUO Ethical Corporate Management Principles", which is the company's highest integrity policy, was approved by the board of directors in November, 2014.

 

According to "AUO Ethical Corporate Management Principles", the Company establishes “AUO Enterprise Integrity Policy” and “AUO Declaration Regulations for Conflict of Benefits”.  HR Headquarter is responsible for formulating the ethical management policy and preventive measures as well as supervising their implementation and to report to the directors regarding the implements in the first board meeting each year.

 

The implements of the integrity operations include that each new employee is required to attend an advocacy session on AUO Integrity Policy and sign a declaration of integrity. In addition, Global Integrity Advocacy Week is held annually and the on-line compliance training courses are arranged. Furthermore, divisions that engage closely with suppliers or are involved in supplier affairs have been identified as in positions of high integrity risk, for which the employees of these divisions are required to undergo the report of conflict of interest. On the other hand, AUO’s suppliers and subcontractors are required to sign a Statement of Compliance with AUO Supplier / Subcontractors Code of Conduct.

 

Among the above matters, through training, every new employee needs to take 10 minutes integrity course and to sign an integrity statement. In 2020 we have trained 966 employees and the signing rate is 100%. A Global Integrity Advocacy Week is held every year. Integrity-related messages are announced by e-news and broadcast by voice record to ensure that all employees understand the core AUO values on integrity. To prevent unethical conduct, through the periodical supervision, anti-corruption employees are required to report any conflicts of interest each year. In 2020, 659 employees in anti-corruption positions have reported and the reporting rate is 100%.

 

 

 

Employee Benefits and Retirement Policy

1. Employee Welfare Measures

 

(1) Employees are entitled to labor insurance, National Health Insurance, and group insurance on the first day of work.

(2) The Company has set up a benefits trust fund program, which inspires employees through linking longterm benefit plans with the Company's operating performance.

(3) Apart from monthly salaries, annual bonuses such as those for the Mid-Autumn Festival, Dragon Boat Festival and Lunar new year are also available. Motivation bonuses, performance bonuses, and employee compensations are given in due course based on the Company's profitability.

(4) Staff restaurants are available at each fab site, providing breakfast, lunch, dinner, and late-night meals. Meals are subsidized.

(5) Life plaza that comprises convenience stores, coffee shops, bakeries, fruit bars, and laundry shops is set up within each fab. In addition, special sales events are also launched from time to time to provide affordable daily consumption for our colleagues.

(6) The Company has set up a Wellness Center at each fab. A medical team of professional doctors and nurses are in charge of the employees' well-being. Various health promotion activities are held to provide comprehensive body, mind, and spiritual health care.

(7) Fitness center managed by a professional health management team is built at each fab. Apart from permanent stadiums, fitness equipment, and sports classrooms, irregular courses are given at the request of colleagues.

(8) AUO's Employee Welfare Committee is organized to take care of employees' lives, promote their wellness, and maintain a harmonious labor-management relationship. The committee is responsible for the planning and organizing of staff benefits and various activities such as sports seasons, celebration of festival, club activities, and employee outings. Other benefits and subsidies include those connected to emergency assistance, in-hospitalization, weddings, funerals and other events.

 

 

2. Retirement Policy and Execution

 

(1) The Company has provided Retirement Policy.

(2) Supervisory Committee of Workers’ Pension Preparation Fund was established in August 1997 and began to allocate pension in May 1998. The Allocation is based on 2% to 15% of the monthly salary.

(3) Starting from July 2005, the 2nd-tier new labor pension plan was implemented in accordance with the law.

(4) According to the provisions of International Accounting Standard No.19, the actuary is required to conduct evaluation on the pension reserve fund, and submit an actuarial assessment report.