Internal Performance Evaluation of the Board and Functional Committees
The Company's Board of Directors has approved the "Methods to Evaluate Performance of the Board of Directors" on January 25, 2017. The Company executes the performance evaluation in the fourth quarter each year. In 2023, the members of the Board of Directors and functional committees and the responsible departments for Board of Directors meetings has processed internal performance evaluation on the “Board of Directors”, ”Director members”, “Audit Committee”, “Remuneration Committee” and “Corporate Governance Committee”. Each evaluation is processed separately and the assessment results will be classified into three levels: Exceeding Expectations, Meets Expectations, and Room for Improvement.
In 2023, the self-assessment results of the “Board of Directors”, ”Director members”, “Audit Committee”, “Remuneration Committee” and “Corporate Governance Committee” were rated as "Exceeding Expectations" and no material improvement items were found. The evaluation results will submit to the Board of Directors and Corporate Governance Committee in the Board meeting in January, 2024 and will be as a reference for members of the Board of Directors and functional committees on their performance, compensation and nomination renewal.
After Remuneration Committee referred to the Internal Performance Evaluation in 2022, it approved of the fully distribution of compensation for Company directors in 2022.
External performance evaluation of the Board of Directors and functional committees
In 2021, the Company has commissioned Taiwan Corporate Governance Association to carry out an external assessment of the Board’s efficacy, especially with regard to eight aspects of the Board: composition, leadership, authority, supervision, communication, internal control and risk management, self-discipline and supportive systems. The assessment is carried out through an online questionnaire and site visits.
The Taiwan Corporate Governance Association (TCGA) and its assessment experts have no business dealings with the company and are independent. Its report shows that five of the Company's nine directors are independent directors, accounting for more than half of the total board of directors, and more than one-fifth of board of directors is female. All of them are professionals and with rich management experiences. Through the semi-annual strategy meeting, independent directors are invited to discuss the environment and major issues faced by the Company on the Company's "biaxial transformation" strategy, and to form a consensus on major development goals and strategies.
The company submitted the evaluation results to the board of directors on February 10, 2022. The board of directors based on the recommendations of the TCGA as a reference for continuing to improve the functions of the board of directors, Including amendments to the Whistleblowing policy and channel, showing that the company attaches importance to the effectiveness (including trustworthiness) of the reporting system. Please click here to view the external conclusion assessment statement from the Taiwan Corporate Governance Association.
Remuneration of the Board and Executive
(1) The remuneration of the directors of the Company shall be paid by the Board of Directors in accordance with the provisions of the Regulations Governing the Remuneration of Directors and Members of Functional Committees, which are formulated in accordance with the authorization of the Articles of Incorporation, based on the participation and value of contribution by the directors to the operation of the Company, and with reference to the standards of domestic and foreign industry. The remuneration of the directors shall be increased in accordance with the chairman, convener and members of the functional committees, and may be reduced at their discretion in accordance with the results of operational performance or performance evaluation by the directors. The remuneration of the directors of the Company is subject to the provisions of the Articles of Incorporation. If the Company has profit in the current year, it shall allocate not less than 5% as the compensation of employees and not more than 1% as the compensation of directors. However, if the Company still has accumulated losses, the amount of compensation shall be reserved in advance. Starting from 2024, the director’s remuneration will be reported annually to the shareholders’ meeting.
(2) The remuneration of the managers of the Company shall be paid in accordance with the principle of "Remuneration Policy of Managers" determined by the Remuneration Committee and the Board of Directors, and shall be reviewed by the Remuneration Committee on an annual basis and submitted to the Board of Directors for resolution. The Company has also cooperated with external professional consultants for a long time to ensure that managers' remuneration policies, payment levels and market fluctuations are linked. Executive compensation includes salary and variable compensation. Salary is determined according to duties, responsibilities, and professional abilities, with reference to the standards of the same industry. Variable compensation is highly linked to the Company's operating results, individual duties, and performance, and accounts for about 70% to 90% of the total executive compensation. In addition to the employee's remuneration for earnings distribution, there is also a long-term reward plan for managers. The remuneration committee sets performance targets according to the Company's development strategy. In addition to financial indicators such as strategic product revenue, it also takes EPS (Environment, People and Society) as the main axis, covering ten sustainable development projects, deepening the connection with shareholders' interests and practicing the commitment of sustainable management.
To deepen the connection between executive compensation and shareholder interests and fulfill commitment to sustainable business practices, the Remuneration Committee will review and determine the distribution of rewards based on overall operational results and individual performance, including full, proportional, deferred, or cancellation of remuneration items.
(3) Part of the manager's remuneration is paid in the form of stock, and the Board of Directors had formulated the "Executive Stock Ownership Guidelines" on 23. Feb, 2023, which requires executives to own company shares in an amount equal to a multiple of their annual base salary: ten multiples for the chairman, CEO, and president; and five multiples for other executives. The executives are required to achieve the shareholding target within five years of appointment or from the policy effective date, and maintain the value of the above shareholding during the term of the executive, so as to strengthen corporate governance and reduce management risks.