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.
- AUO's corporate governance evaluation has been ranked in the top 5% for eight consecutive years.e
- Performance evaluations of the Board of Directors and functional committees have shown results exceeding the standards.
Board of Directors Meetings
7
Audit Committee Meetings
6
Remuneration Committee Meetings
4
Shareholders’ Meeting
1
Sustainability and ERM Executive Committee Meetings
2
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
at least 3
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
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 2023 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 2024, which will serve as a reference for members of the Board of Directors and functional committees on their performance, remuneration, nomination and renewal.
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.
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 2023 Annual Report Chapter 3-Corporate Governance
- Please refer to the audit committee's responsibilities and meeting attendance in the AUO 2023 Annual Report, Corporate Governance Report section.
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.
Learn More
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.
AUO's senior management team's long-term incentive bonus plan is linked to (1) operational performance goals and (2) ESG sustainable performance and key management objectives. The achievements of the past three years are reviewed annually. If the set goals are met, members of the management team can receive a bonus equivalent to 70% to 90% of their overall compensation. The aim is to significantly align the compensation of senior executives with the company's operational 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.
Sustainability and ERM Executive Committee
The Sustainability Committee was established by AUO at the end of 2013 as the top governance body for sustainable development. In 2018, the Sustainable Development Office was created on the strong foundations built up by AUO over the past decade to oversee sustainability policy. In response to global climate issues and the trend towards net zero carbon emissions, the AUO Sustainability Committee was reorganized and promoted to become the ESG and Climate Committee at the end of 2021. The new Committee is not only responsible for realizing the AUO CSR EPS 2025 Goals but also for carbon missions in the environmental, social, and governance aspects with achieving Net Zero by 2050 as the core objective. AUO seeks to respond to stakeholder concerns on the environmental, social, and corporate governance aspects in a proactive manner as well as promote globalized business risk management and response strategies in order to realize the goal of sustainable management. The Board of Directors has now passed the upgrading of the “ESG & Climate Committee” to “Sustainability & ERM Committee.” A “Sustainability and ERM Executive Committee” that reports to the “Sustainability & ERM Committee” has now been set up as well
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.
Sustainability and ERM Executive Committee is composed of the Chairman and two independent directors, and meets at least twice a year. It oversees the Sustainability and Risk Execution Committee, which operates subcommittees according to their respective work policies. Senior executives, such as vice presidents, lead the subcommittees to develop goals and plans based on the vision blueprint. Monthly reviews and quarterly reports to the Chairman are conducted to decide on major issues, while annual reports are presented to the Board of Directors in accordance with corporate social responsibility guidelines to demonstrate operational effectiveness.
Learn More
