Governance
AUO's Corporate Governance Blueprint
AUO voluntarily emphasizes corporate governance, and we have also complied with the Financial Supervisory Commission‘s Corporate Governance 3.0 Sustainable Development Blueprint to enhance the Company’s sustainable development and strengthen our international competitiveness, ultimately developing into a sustainable and outstanding enterprise.
Implementation status of corporate governance related affairs in 2022
- All members of the Board have completed at least six credits of continuing education.
- The Company has filed for liability insurance for its Directors and important employees, and reports to the Board of Directors after the insurance has been renewed.
- The Company has conducted performance evaluation on the Board of Directors and the functional committees. The evaluation results of the Board of Directors, Audit Committee, and the Remuneration Committee are all Exceeding Expectations.
- The Company‘s results in the 89h Corporate Governance Evaluation had ranked among Top 5%. The training hours for the chief of corporate
- governance totaled 21 hours in 2022
Board of Directors Meetings
6
Audit Committee Meetings
5
Remuneration Committee Meetings
3
Shareholders’ Meeting
1
CSR Committee Meetings
4
Corporate Governance Committee Meetings
4
Board of Directors
The duties of AUO’s Board of Directors include: Supervising the Company’s strategy, monitoring the management and the operation, and arrangement of the corporate governance system. It is also responsible for the Company and the Shareholders’ Meeting, and exercises its powers in accordance with the law, the regulations of Articles of Incorporation, or the resolutions of the Shareholders’ Meetings. In addition, through the disclosure of the Directors’ attendance at Board Meetings and interest avoidance status in the annual report, the requirements of each Director’s own responsibilities and obligations are emphasized to ensure the performance of Company monitoring and management.
Board Diversification
In accordance with the Company’s Corporate Governance Code, the board’s composition must consider the diversity. Company managers cannot make up more than one-third of the seats on the board, and appropriate diversity guidelines with regard to its operations, business situation and development needs must be drawn up to include standards regarding at least but not limited to the following two aspects:
- Basic conditions and values: gender and age.
- Specialist knowledge and skills: Specialist background, specialist skills, and industry experiences, etc.
Overall results
- The result of the Board’s internal self-assessment was“exceeding the standards.”
- The Board members are experts, autonomous and diverse
- The Board of Directors oversees the operational departments’ planning and implementation of sustainability-related issues and the Company Leads the industry by being the first to appoint a Chief Sustainability Officer.
Independent Director seats
exceeds 50
Female Director seats
is at least 4
Board members with a management position within the Company
did not exceed 1/3
Board Performance Evaluation
The Board of Directors proactively implements sustainability governance, is deeply involved in the Company’s operations, and exhibits a high degree of self-discipline.
The performance of the Board of Directors is assessed annually
Internal self-evaluation
External assessments
In the end of October, 2019, 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”, “Audit Committee”, and “Remuneration Committee”.
Our Company has commissioned the Taiwan Corporate Governance Association to carry out an external assessment of its Board’s efficacy, especially with regard to 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 and the results are used to improve the Board’s functioning.
The scope of the assessment of the Board of Directors includes 45 indicators that fall under five aspects: level of participation in Company operations, enhancing quality of decision-making from the Board, composition and structure of the Board, nomination of Directors and continuing education as well as internal control.
The self-evaluation results of “Board of Directors”, “Audit Committee”, “Remuneration Committee” and “Corporate Governance Committee” of the Company in 2022 were all “Exceeding Expectations”, without any major improvement items. The evaluation results are expected to be reported to the Board of Directors in the first board meeting in 2023, which will serve as a reference for members of the Board of Directors and functional committees on their performance, remuneration, nomination and renewal.
Governance organization operation and execution
Audit Committee
The Audit Committee communicates with the Company’s financial statement auditors on a regular basis, and is responsible for the appointment of financial statement auditors as well as conducting independence and performance reviews. At the same time, internal auditors are required to submit audit summary reports to the Audit Committee regularly based on the annual audit plan and to prepare reports on submissions made to the Audit Committee mailbox. The Audit Committee also conducts regular evaluations of AUO’s internal control system, internal auditors, and their work performance.
Composition of the Audit Committee
The AUO Audit Committee is made up of all independent directors (including 2 financial experts). All 5 independent directors satisfy the criteria for professionalism, work experience, independence, and the number of concurrent independent directorships per the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.
AUO 2021 Annual Report Chapter 3-Corporate Governance
- The responsibilities of the Audit Committee and their meeting attendance can be found in the AUO 2021 Annual Report Chapter 3-Corporate Governance
Audit Committee performance evaluation
The scope of the assessment of the Audit Committee include 23 indicators respectively that fall under five aspects: level of participation in Company operations, Duties understanding of the functional committees, enhancing quality of decision-making from the functional committees, composition and nomination of the functional committees as well as internal control. The assessment results will be classified into three levels: Exceeding Expectations, Meets Expectations, and Room for Improvement.
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Organization of the Remuneration Committee
- Define and periodically review compensation policies, systems, standards and structures.
- Periodically review compensation packages of directors and managers.
Remuneration Policy of the Board of Directors and Senior Management
AUO Board of Directors remuneration policy is handled in accordance with the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter”, proposed by the Remuneration Committee and executed upon the decision of the board of the directors. AUO prescribes in the Company’s articles of the incorporation that should the Company reap profits for the year, it shall allocate no more than one percent for the directors’ remuneration and should the Company have accumulated losses, it shall reserve a certain amount of the remuneration.
The senior management team of AUO's long-term incentive bonus plan links the activation conditions to (1) operational performance targets and (2) ESG sustainable performance targets. Annual reviews of the cumulative results over the past three years will be carried out. If the activation condition targets are met, members of the management team can receive a bonus equivalent to 100% ~ 150% of their fixed salary, making the compensation of senior managers highly linked to the company's operational performance and sustainable performance.
When approving the senior management’s remuneration, the Remuneration Committee works simultaneously with external professional salary consultants to ensure that the senior management’s remuneration is sufficiently competitive in order to improve the link between salary policies and the market trends.
Part of the compensation for senior management is paid in stock. The “Executive Stock Ownership Guidelines” also require the value of shares held by senior management to be a set multiple of their annual base salary: the multiple is 10 times for the Chairman who is also senior management, CEO and President , and 5 times for other senior management. Senior management are required to achieve the shareholding target within 5 years of their appointment. The total worth of shares must also be maintained while they are still senior management to strengthen corporate governance and fulfill our commitment to corporate sustainability.
The scope of the assessment of the Remuneration Committee
The scope of the assessment of the Remuneration Committee include 23 indicators respectively that fall under five aspects: level of participation in Company operations, Duties understanding of the functional committees, enhancing quality of decision-making from the functional committees, composition and nomination of the functional committees as well as internal control. The assessment results will be classified into three levels: Exceeding Expectations, Meets Expectations, and Room for Improvement.
Corporate Governance Committee
Under the Corporate Governance Committee Charter, the Corporate Governance Committee must be convened at least once a year, and ad hoc meetings can be convened as necessary. Its key responsibilities are as follow :
- Define the criteria governing the diversity and independence of Board members including professional knowledge, technology, experience, and gender. Follow the same criteria for the search, review, and nomination of candidates for the Board of Directors.
- Construct and develop the organizational structure of the Board of Directors and committees, evaluate the performance of the Board of Directors, committees, and directors, and evaluate the independence of independent directors.
- Define and periodically review the training and succession plans for directors.
Corporate Governance Manager
Corporate Governance Manager is responsible for the supervision and planning of corporate governance. Corporate Governance Manager qualifications satisfy the criteria for corporate governance officers set out in Article 3-1-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
Corporate Governance Manager is responsible for the supervision and planning of corporate governance. Corporate Governance Manager qualifications satisfy the criteria for corporate governance officers set out in Article 3-1-1 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
ESG and Climate Committee
The balanced development of Corporate Management and Green Sustainability are AUO‘s philosophies. While pursuing a strong corporate physique, we invest more long-term resources in environmental protection and social engagement issues. The “AUO Green Solutions” was unveiled in 2008, taken the lead in the industry to reduce environmental impact at all stages of the life cycle of our products with a systematic strategy. AUO established the CSR Committee at the end of 2013, which is the highest governance body for the Company‘s sustainable development and operation. In 2018, based on a solid foundation built over 10 years, the Sustainability Management Department was further established, to make the overall planning of strategies. Taking “Go beyond CSR and Create Shared values” as the vision and goal, AUO closely connects with the United Nations Sustainable Development Goals and corporate core competitive strategies. By attaching importance to value chain cooperation and actively building relationships with global partners, AUO leads itself to play the leader in corporate sustainable development and strives to create more shared values.
The Committee performs its duties based on the Plan-Do-Check-Act (P-D-C-A) cycle. Feedback will be given to each team at the end of a year, and each team is delegated to evaluate and review response measures and to establish target projects, which will be launched after chairperson confirmation at the annual conference during the subsequent year. The Sustainability Committee regularly meets quarterly, and each team reports and reviews its operational effectiveness to the Committee chairperson, as well as topics of concern from the stakeholders on a quarterly basis. Information will be compiled and submitted to the Board of Directors in the first Board meeting each year.
ESG and Climate Committee regularly meets quarterly, and each team reports and reviews its operational effectiveness to the Committee chairperson, as well as topics of concern from the stakeholders on a quarterly basis. Information will be compiled and submitted to the Board of Directors in the first Board meeting each year.
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