Corporate governance report

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Corporate governance report

Corporate governance report

Corporate governance report


Corporate Governance Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reason

Items of Evaluation Implementation Status Deviations from“ the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
1. Does Company follow “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” to establish and disclose its corporate governance practices? Wistron has set up “Corporate Governance Best Practice Principles” by Board of Director and made amendment on December 23, 2021, and there is no discrepancy between corporate governance principles. No discrepancy
2. Shareholding Structure & Shareholders’ Rights
(1) Does Company have Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes and litigation matters. If yes, has these procedures been implemented accordingly? Wistron has designated the Shareholder Service Office to handle the shareholders’ feedbacks, questions and disputes. No discrepancy
(2) Does Company possess a list of major shareholders and beneficial owners of these major shareholders? Wistron holds information on the identities of major shareholders and their ultimate controlling persons. No discrepancy
(3) Has the Company built and executed a risk management system and “firewall” between the Company and its affiliates? Wistron has established the appropriate risk control mechanisms and firewalls according to internal rules, such as rules of supervision over subsidiaries, rules governing endorsement and guarantee, loaning of funds and the rules governing acquisitions and disposal of assets etc. No discrepancy
(4) Has the Company established internal rules prohibiting insider trading on undisclosed information? Wistron enacted “Regulations on Insider Trading” to prevent any illegal activities in terms of insider trading. When the new directors or managers assume office, the company will provide relevant standardized information for education and promotion of the policy; and after each notice of board meeting is sent, or if the company is raising funds or repurchasing treasury stock, the company will remind the insiders to avoid buying or selling company stock in order to comply with the insider trading prevention policy.

Wistron’s board of directors approved the amendment of ”Corporate Governance Best Practice Principles” on December 23, 2021 to ask insiders shall not trade the shares in closed period during the 30 days before the announcement of the annual financial report and the 15 days before the announcement of the quarterly financial report.
No discrepancy
3. Composition and Responsibilities of the Board of Directors
(1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? Wistron has set up the diversity policy of the board of directors in the Article 20 of “Corporate Governance Best Practice Principles”. For specific management objectives and implementation, please refer to the chapter "Diversity and Independence of the Board of Directors" No discrepancy
(2) Other than the Compensation Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees? In addition to establishing the Compensation Committee and the Audit Committee as required by law, Wistron has created the Nominating Committee and the ESG committee.

A. The Nominating Committee is authoritied to construct and to review the candidates of the directors, executives and the members of committees under the board of directors, and to construct and to review the setup and operation of committees.

B. ESG Committee is responsible for formulating the direction,strategy and goals of sustainability development and track the implementation status and effectiveness of corporate sustainable development.
No discrepancy
(3) Has the Company established a methodology for evaluating the performance of its Board of Directors, performed evaluations on an annual basis, submitted the results of the performance evaluation to the board, and use it as a reference for individual directors’ remuneration and renomination? Wistron has set up “Rules for Board of Directors and Function Committee Performance Assessments”. According to the assessments, the evaluation period shall be from January 1 to December 31 of the current year, and for the current year shall be reported to the board of directors and functional committees at the end of first quarter of the following year. Besides, Wistron shall conduct board performance evaluation by an external independent professional institution or a panel of external experts and scholars at least once every three years.

Wistron had completed the performance evaluation of Board of Directors, Audit Committee and Compensation Committee for the period from January 1, 2021 to December 31, 2021. If the rate is over 90% (inclusive), it shall be "exceed the standard". If the rate is over 80% (inclusive) or less than 90%, it shall be "compliant with the standard". When the rate is less than 80%, it is "needs improvement". Upon completion of the above procedures, the rate of evaluation of Board of Directors, Audit Committee and Compensation Committee were 99.33%, 98.80%, 100%, 100% and 99.14%. the evaluation results were "exceed the standard".
No discrepancy
(4) Does the Company regularly evaluate its external auditors’ independence? The evaluation of CPA is one of the main duties of the Audit Committee each year. Wistron evaluates the independence of CPA based on KPMG’s Statement of Independence and items stated in Certified Public Accountant Act and ”Integrity, Objectivity and Independence.”, No.10 of “The Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China”.
No discrepancy
4. Has a TWSE/TPEx listed company appointed an appropriate number of suitable corporate governance personnel, and designated a corporate governance officer to be in charge of corporate governance affairs (including, but not limited to, providing directors and supervisors with the information necessary to execute business, assisting directors and supervisors in complying with laws, handling matters related to board meetings and shareholders meetings in accordance with the laws, processing corporate registration and amendment registration, and preparing minutes of board meetings and shareholders meetings)? The Chief of Staff Office of the Company is the unit to be in charge of corporate governance affairs. The board of directors appointed Mr. Frank F.C. Lin as the Corporate Governance Officer of Wistron on March 25, 2019.

It is advisable that the corporate governance affairs mentioned in the preceding paragraph include at least the following items:

A. Handling matters relating to board meetings and shareholders meetings according to laws.

B. Producing minutes of board meetings and shareholders meetings.

C. Assisting in onboarding and continuous education of directors.

D. Furnishing information required for business execution by directors.

E. Assisting directors and supervisors with legal compliance.

F. Other matters set out in the articles or corporation or contracts.

The 2021 implement of corporate governance affairs were as bellows:

A. Developed annual work plan and meeting agendas and prepared meeting information for meetings of the Board of Directors, Audit Committee, Compensation Committee, Nominating Committee, and ESG Committee. If issues are relevant to stakeholders, related stakeholders are reminded to recuse themselves before a meeting takes place. In 2021, Wistron convened eight board meetings, seven Audit Committee meetings, four Compensation Committee meetings, three Nominating Committee meetings, and two ESG Committee meetings. Please see the Company website for details regarding the convention of the afore mentioned meetings.

B. Registered shareholder meeting date within the legally ordered period (2021 shareholder meeting was held on June 17, which was postponed to July 20 due to the Covid-19), and the shareholders’ meeting shall be complete within the time limit specified by the competent authority.

C. Responsible for material announcements and matters related to the resolutions of board meetings and shareholders' meetings and announced material information pursuant to law.

D. Arranged six hours of a continuing education courses for all Directors, President, chief corporate governance officer and CFO of Wistron. The courses are " Corporate Governance Blueprint 3.0 and Directors' Responsibilities " and " Business Management and Public Opinion/Negative Publicity Management Strategies ".

E. Arranged to have independent directors communicate to the head of Audit Division and the CPA at an Audit Committee meeting.

F. Arrange the MIS to present the information security implementation to the Board of Directors on December 23, 2021.

G. Arranged legal department to present intellectual property rights management to the Board of Directors on December 23, 2021.

H. Arranged HR department to present the implementation and plans for promoting operational integrity in 2021 to ensure the proper implementation of “Ethical Corporate Management Best Practice Principles”.

I. Arranged the Sustainability Office to present the implementation of Sustainable Development Best Practice Principles, the operation of risk management and the communication with stakeholders.

J. Performed the 2021 performance assessments of Board of Directors and functional committees, and reported the results of the performance evaluation to the Board of Directors on March 16, 2022.
No discrepancy
5. Whether the company has established channels of communication with Stakeholders (including but not limited to shareholders, employees, customers and suppliers), and open the Stakeholders section on the company's website, and respond appropriately to Stakeholders’ interests/ concerns regarding corporate social responsibility. Wistron has adopted the Global Reporting Initiative Standards (GRI Standards) and the AA1000 Stakeholder Engagement Standards as the framework to establish the procedures for identifying material topics for corporate sustainable development. The framework is used as the basis for disclosures in the Sustainability Report.

In order to communicate with different stakeholders effectively, the Company has adopted the five factors specified by the AA1000 Stakeholder Engagement Standards. According to these factors: (dependence, responsibility, influence, multiple perspectives, and tension), we have identified seven stakeholder categories including customers, employees, investors/shareholders, suppliers, government/authorities, and media.

We have also designated a stakeholder section on the corporate website to address our corporate sustainability and social responsibility activities and relevant issues.
No discrepancy
6. Has the Company appointed a professional registrar for its Shareholders’ Meetings? Wistron has designated the Shareholders Service Office to handle the shareholders’ proposal and disputes. No discrepancy
7. Information Disclosure
(1) Has the Company established a corporate website to disclose information regarding its financials, business and corporate governance status? Wistron has set up a website containing the information regarding financials, business and corporate governance status. No discrepancy
(2) Does the Company use other information disclosure channels (e.g. maintaining an English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)? Wistron has one chief spokesman and one acting spokesman and also designated a team to be responsible for gathering and disclosing the information. Wistron has formulated Regulations on Insider Trading to govern procedures to manage material information disclosure; such management procedure has been informed to all employees, management and directors. No discrepancy
(3) Does the Company announce and report the annual financial report within two months of the fiscal year end, and announce and report the financial reports for the first, second and third quarter and each month’s operating performance ahead of the required deadline? Wistron has not announced and declared the annual financial report within two months after the end of the fiscal year, but the Company still announces and reports the quarterly financial reports and each month’s operating performance as early as possible within the prescribed time limit, and announces important financial figures and XBRL information on the day the board of directors approved the financial report, and announce the electronic book of financial report on the next business day. No discrepancy
8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors)?
Employee benefits and rights, Employee care Wistron emphasizes on the importance of employee benefits and rights. We not only comply with related laws and regulations, but also publish all corporate governance related regulations and operating conditions on the company's official website to ensure that employees are well informed. The company is committed to social responsibility to protect the rights and interests of its employees and has joined the Responsible Business Alliance (RBA). As a member of the Alliance, Wistron strictly complies with the relevant norms, and integrates human rights concerns into the various aspects of its daily operations. Wistron takes responsibilities for employee wellbeing. No discrepancy
Investor Relations The major mission of the investor relations department is to update the latest business development and strategy thinking to global investors. Through such periodic communication, the company can enhance its public image and the transparency of financials and corporate governance. No discrepancy
Supplier relationship In order to maintain long-term advantages of research and development in new technology, quality control, price competition, adequate supply, and to provide green products that are in line with energy conservation and environmental protection, Wistron on the basis of good faith to conduct supplier audit and management, so to confirm suppliers comply with various environmental protection treaties and social responsibilities, continue to provide products that meet the standards of Wistron, and with competitive advantages in price. Wistron will keep upholding the spirit of mutual trust and benefit to grow together with suppliers and create Win-win. No discrepancy
Stakeholders’ Rights The company’s investor relations, public relations, shareholder services, and legal departments communicate with stakeholders for various situations and provide the related contact information on the company website. No discrepancy
Continuing education of Directors and Managers No discrepancy
The implementation of risk management policies and risk evaluation measures Wistron implements the enterprise risk management (ERM) mechanism in accordance with the regulation of "Risk Management Policies and Procedures", which confirms the board of directors as the unit with the highest risk responsibility, and establishes a risk management team under the ESG Committee.

Wistron conducts risk assessments on a regular basis, identifies and measures risks in accordance with industry practices and international standards, and issues risk management reports to the board of directors every year.

The main results of conducting risk management policy in 2021 are as follows:

A.The ESG Committee is convened to evaluate the company's important risk issues based on the risk matrix of the possibility of various risks and the degree of risk impact to confirm the priority of risk management.

B.Following the Task Force on Climate-related Financial Disclosures (TCFD) to identify climate risks and opportunities, based on the framework of "Governance", "Strategy", "Risk Management", "Metrics and Targets". And establish measurement indicators and target management mechanism.

C.An Information Security Committee has been established, with the general manager and the chief digital officer & chief information security officer as the co-chairman to coordinate information security matters, and formulate an "information security policy" to protect the security of employees, customers, suppliers and operation-related information assets.

D.Convened a risk management meeting to conduct sensitivity analysis and stress tests on financial risks, climate change risks, water resources risks, information security risks, geopolitical risks, new technology risks and intellectual property rights of Wistron and its important subsidiaries. To strengthen the risk awareness of and quantitatively analyze the risk tolerance levels.

E.The general manager urges all units and subsidiaries within the company to conduct self-assessment of internal control twice a year, and the audit unit reviews the self-assessment reports of all units and subsidiaries, and together with the report of improvement of internal control deficiencies and abnormal matters found, annually Issue a statement of internal control system.

F.Revise the Wistron's risk management policies and procedures, and set up a risk management team under the ESG Committee.

In addition, internal auditors regularly check the implementation of various risk management measures, improve the deficiencies, and cooperate with the strict requirements of the company to implement Six Sigma to truly measure and effectively monitor the operation of the risk management mechanism.
No discrepancy
The implementation of customer relations policies Wistron always strictly abides by customer confidentiality. If there are competitors among customers, different teams will be set up to serve customers, or even different factories to produce and build firewalls. It is strictly forbidden to talk about customer confidentiality in public in order to achieve the goal of protecting customers. No discrepancy
Purchasing insurance for directors Wistron has purchased liability insurance for directors and managers, and had report the insured amount, coverage, premium rate, and other major contents of the liability insurance to Board of Directors on November 5, 2021. No discrepancy
9. Succession plan of board members and management team The selection of directors of Wistron adopts the candidate nomination system and is handled in accordance with the "The Election Regulations of Directors". Wistron has also set a diversity policy for the composition of the board of directors in the "Corporate Governance Best Practice Principles", taking into account the diversity of professional knowledge, technology, experience and gender required by directors, and will refer to the recommendations of the Nominating Committee to propose director candidates. The list of people and the appropriate arrangements for the composition of the board of directors and candidates for succession.

Meet the needs of sustainable operation of enterprises, Wistron takes "competencies" as the key of talent development, structure functional development program for managing levels.

Regarding succession plan of key managing level, Wistron regularly review talent readiness rate, based on talent’s competency gap to select individual development plan.

The development plan includes online, in class courses, project assignment, strategic rotation, action learning, internal and external coach. The plan is to stretch successor capacity , level up talent pool.
No discrepancy
10. Please indicate the improvement of the results of the corporate governance evaluation issued by the Company's Center for Corporate Governance in the last year of the TWSE and provide priority measures and measures for those who have not yet improved. (1) In order to implement the policy of diversified board members, Wistron has elect a female independent director in 2021 general shareholders meeting.

(2) Wistron’s board of directors approved the amendment of ”Corporate Governance Best Practice Principles” on December 23, 2021 to ask insiders shall not trade the shares in closed period during the 30 days before the announcement of the annual financial report and the 15 days before the announcement of the quarterly financial report.

(3) In accordance with ”Rules for Board of Directors and Function Committee Performance Assessments”, Wistron will conduct the external performance evaluation of board of directors before the end of 2022.
No discrepancy