HTC 2009 Annual Report Download - page 32

6362
CORPORATE GOVERNANCE
6. If the Company has established corporate governance policies
based on TSE Corporate Governance Best Practice Principles,
please describe any discrepancy between the policies and
their implementation:
In 2008 HTC adopted its "Guidelines for the Corporate Governance". Its provi-
sions are based on the Corporate Governance Best-Practice Principles for
TSEC/GTSM Listed Companies, and were also drafted with reference to the
corporate governance rules and practices of companies in Taiwan and abroad
with outstanding records in that area, to guarantee that the board of directors
has the authority to independently supervise corporate operations and to make
all corporate decisions necessary to fulfill its responsibilities to shareholders
and society.
7. Other important information helpful to understanding HTC
corporate governance practices (employee rights and inter-
ests, employee care, investor relations, supplier relations,
rights of interested parties, professional development of direc-
tors and supervisors, implementation of risk management
policies and risk measurement standards, implementation of
customer policies, and HTC's purchase of professional liability
insurance for directors and supervisors):
> Employee rights and interests and employee care
HTC's employee code of conduct provides rules and guidelines for employees
to follow while involved in company operations. All employees of our compa-
ny and its branches and subsidiaries, regardless of their position, level, or
location, abide by this code of conduct. Any unlawful conduct, either at the
company or otherwise is prohibited.
One of HTC's general principles is to provide a safe and healthy work environ-
ment, fair opportunities, and principles for handling company resources and
company information.
In relations with customers and suppliers, HTC endeavors to maintain long-
term relationships based on a fair and reasonable approach in order to create
win-win partner relationships.
In regulating conflicts of interest, HTC provides principles of conduct for the
guidance of employees when facing issues in this area.
1. HTC is committed to providing employees with a working environment free of
discrimination or harassment (including sexual harassment). Any form of
speech or conduct intended to incite hatred, conduct in violation of the code
which could lead to accidental injury, or instances of discrimination or harass-
ment, will be immediately reported to the responsible department for investi-
gation and punishment.
2. Due caution is also to be exercised in dealing with employee personal infor-
mation, which shall be handled so as to give due regard to both the needs of
the organization and the employee's right to privacy. Divulging personal
employee information of any kind is inappropriate in any situation except
where so required by government laws or regulations.
3. HTC's hiring policies all comply with the relevant laws and regulations, and
provide fair opportunities to both applicants and employees. Hiring decisions
are based on HTC's operating needs, the nature of the work, and applicants'
abilities. HTC's hiring policies must comply with the relevant laws and regula-
tions. Decisions on hiring are made based on the company's operational
needs, the job requirements, and applicant qualifications. Fair opportunities
are provided to both applicants and employees, and there will be absolutely no
discrimination on the basis of any nonwork-related factor, including the appli-
cant's race, skin color, social position, language, belief system, religion, polit-
ical party, family origin, gender, sexual orientation, marital status, appearance,
facial features, mental or physical disabilities, previous union affiliations, or
any other factor protected by government order. Relations between the compa-
ny and any employee shall be based on the principles of respect and good
faith, without considerations of private interest. These principles are applied
(but not limited) to recruitment, hiring, training, promotion, pay scales, bene-
fits, transfers, and other types of associations and recreational activities.
>Investor relations
HTC carries out its social responsibility in the area of investor relations by
endeavoring to enhance the transparency of its financial information and the
timeliness of its announcements of financial and business information. In
addition to immediate announcement of material information, there is early
announcement (within six days) of monthly operating revenues, and prelimi-
nary earnings information is announced at the beginning of the next month
after the end of each quarter. Investor/press conferences are held in Chinese
and English, with an average of more than 100 institutional investors from
Taiwan and abroad participating in the on-line conferences. The above infor-
mation is uploaded to the company website at the same time.
In addition to the regularly scheduled information disclosures above, HTC
also actively participates in investment seminars held by local and overseas
securities firms and investor/press conferences; it also arranges meetings with
domestic and foreign investors in order to further explain financial figures and
operational results that have already been publicly released, helping investors
better understand HTC financial and business information. Further, because
HTC is one of Taiwan's main domestic listed companies, analysts in research
departments at more than ten international securities firms routinely publish
analysis reports regarding HTC's financial and business conditions, which
also provides investors with independent, professional investment analyses.
HTC's investor relations activities in 2009, in summary, were as follows:
Throughout the year, HTC frequently participated in institutional investor con-
ferences held by important domestic or international securities firms in
Taiwan, Hong Kong, Singapore, London, New York, and Shanghai, and peri-
odically visited its main investors in the European, American and Asia regions.
At the same time, foreign and domestic institutional investors and analysts fre-
quently visited our investor relations department or contacted it by telephone.
HTC in the future will continue to advance its work in each aspect of investor
relations in order to fulfill the societal obligations and responsibilities of a list-
ed company toward its investors and shareholders.
>Supplier relations and rights of interested parties
HTC has adopted Procedures for Transactions with Specified Companies,
Group Enterprises, and Related Parties as a guarantee of the rights and inter-
ests of HTC and interested parties. HTC has also signed purchasing contracts
with all its suppliers to govern all transactions and cooperative efforts between
it and those other parties as a guarantee of their lawful rights and interests.
>Status of professional development of directors, supervisors, and managerial
officers:
HTC directors and supervisors voluntarily attend the seminars held by profes-
sional training institutes as required by law and regulation; in addition, to fur-
ther strengthen implementation of corporate governance, regular attendance
by directors, supervisors, and managerial officers is planned for courses in
finance, business, commerce, law, and accounting that also cover corporate
governance issues, or for courses on internal control systems and liability in
connection with preparation of financial reports. Details of professional devel-
opment courses taken by directors, supervisors, and managerial officers for
the period of the 2009 fiscal year up to the date of annual report publication
can be found in Appendixes 1 and 2.
>Status of implementation of risk management policies and standards for
measurement of risk:
HTC has adopted relevant risk management policies and standards for meas-
urement of risk, and has established a dedicated unit to carry out risk manage-
ment and risk measurement. With respect to implementation, HTC has per-
formed new assessments in the area of operational risk after transitioning
principal operations toward brand company business. After adjustment, the
allocation policies for risk factors reflected in the account titles of its financial
statements, such as Allowance for Bad Debts on Receivables, Product
Warranty Reserve, and License Fee Allowances, will be submitted for review
by the supervisors and the CPA in order to ensure that HTC financial state-
ments adequately and reasonably express these factors.
HTC's management of possible risk associated with promotion of its global
brand business is explained below:
1. Exchange gain/loss risk: Specially appointed personnel will strengthen risk
management and handle the necessary exchange rate hedging. Reserve
accounts for on-book liabilities in any currency will also be valued at the
exchange rate on the balance sheet date, reducing as much as possible the
effects of currency fluctuations on HTC business and finances.
2. Receivables risk: Management of receivables risk is based on segmentation of
responsibility, as a finance unit's responsibility for effective management of
receivables quality and lowered risk of bad debt.
3. Management of idle inventory problems: In addition to enhanced procurement
supplier management and better estimates of sales volumes, idle inventory
should be attended to early and appropriation of reserves for loss on idle
inventory should be monitored.
4. Global tax risk: Handling of tax issues and risks arising from the global
reach of HTC operations has been outsourced to an international tax affairs
institution, which undertakes the necessary tax assessments and planning.
A proposal of reorganization of Company's overseas subsidiaries' invest-
ment structure approved by the board of directors on April 30, 2009.
5. Product design quality: Additionally, to ensure quality of design in HTC
products, HTC has also established a department for design quality, which
is exclusively responsible for control and management of quality in both
hardware and software, product safety, and conformance with environmen-
tal regulations around the world. The department provides a complete
range of product testing and certification.
> Status of customer-protection policy implementation:
HTC strictly abides by the contracts it signs with customers and related
provisions in order to protect the rights and interests of its customers.
Regular deliberation on and assessment of the Product Warranty Reserve
for after-sales product service ensures that allocations made to those
reserves are reasonably sufficient and that they adequately express the
warranty responsibilities which HTC should assume for its products.
> Status of liability insurance provided by HTC for directors and supervisors:
HTC amended its Articles of Incorporation by passage of a resolution at the
2006 ordinary shareholders meeting. Article 16 of the amended Articles of
Incorporation provides that the company may acquire liability insurance for
all directors and supervisors throughout their term, within the scope of the
indemnity liability they bear under law in connection with their business
responsibilities, to minimize and disperse the risk of material loss or dam-
age to the company and shareholders as a consequence of any illegal act.
Currently, in accordance with the articles of incorporation, HTC has pur-
chased Liability Insurance for Directors, Supervisors, and Key Personnel
(For insurance details please see Appendix 3 ),thereby transferring the risk
arising from negligence or erroneous or improper conduct by directors,
supervisors, or key personnel, enhancing the soundness of company man-
agement and providing protection for directors and supervisors.
8. If the Company has a self corporate governance evaluation
or has authorized any other professional organization to
conduct such an evaluation, the evaluation results, major
deficiencies or suggestions, and improvements are stated
as follows:
As of 2009, HTC has not yet issued any corporate governance self-assess-
ment report or enaged any other professional institute to perform a corpo-
rate governance assessment for it. It has become a member of the ROC's
Corporate Governance Association (CGA), and the regular participation of
its directors, supervisors, and operations and management-level personnel
in the CGA's Directors and Supervisors Association provides opportunities
for exchanges with government, business, and academia on topics such as
enterprise orientation, strategy development, operations and management,
and financial,legal, and corporate governance issues, thereby advancing
and strengthening the effectiveness of HTC's enterprise management and
the effective operation of its corporate governance.