HTC 2010 Annual Report Download - page 19

36 2 0 1 0 H T C A N N U A L R E P O R T 37
Business Operations
touch control and handwriting functions to deliver both
intuitive touch control and the power to instantly jot
down notes, draw sketches and even make notations on
web graphics and digital images. HTC Flyer is also the
first device to feature the proprietary video application
HTC Watch. HTC Watch gives users access to hundreds
of high definition (HD) movies to download and watch
on demand at reasonable cost. The HTC partnership
with OnLive gives HTC users access to online game
services and makes the HTC Flyer the first tablet in the
world that supports cloud-based mobile gaming.
HTC continuously innovates . Apart from constant
investments to work the full potential of Android,
Windows Mobile and Brew operating systems, we've
been making serious inroads into new but related fields
such as tablets. Also, in this age of the ubiquitous
mobile internet, content is rapidly becoming significant.
HTC is responding to this trend through investments in
mobile phone content providers such as leading online
video provider Saron Digital, online game pioneer
OnLive, mobile financial solutions provider Shanghai
F-road Communication Services, and mobile security
solutions provider NetQin. These and other investment
partnerships will help integrate technology, service
and applications seamlessly to deliver HTC users
unparalleled convenience and entertainment.
R&D Expenditures in Recent Years
Unit: NT$ millions
2011 Q1 2010 2009
Worldwide R&D Expenditures 3,954 12,940 8,373
As a Percentage of Worldwide Revenue 3.8% 4.6% 5.8%
Corporate Governance
HTC is committed to strict and fair governance
principles and constantly works to enhance the
eectiveness of relevant systems and measures. Great
strides continue to be made in openness related to
risk management and financial disclosures. In 2010,
FinanceAsia gave HTC several important recognitions,
including those for Taiwan's 1st runner-up for "Best
Managed Company", 3rd runner-up for "Best Corporate
Governance", 2nd runner-up for "Best Investor Relations"
and 3rd runner-up for "Most Committed to a Strong
Dividend Policy". HTC policies related to corporate
governance are explained further below:
1. Independent Director Positions Created
In accordance with the Securities and Exchange
Law, HTC elected two independent directors at
its board re-elections in 2010. This move further
enhanced corporate governance and increased the
independence and eectiveness of the Board.
2. Remuneration Committee Created
On June 22, 2007, HTC board member HT Cho and
independent director Chen-Kuo Lin were approved by
the board to serve on the remuneration committee.
HTC chairman Cher Wang is serving as the
committee's chairman. The main responsibility of this
committee is to monitor and review, on behalf of the
board, HTC remuneration policies and mechanisms
and make relevant recommendations to the board of
directors.
2007 2008 2009
20.5
21.0
22.5
22.0
22.5
23.0
23.5 %
Employee bonus appropriation ratio
22.9
1.366
21.5
0.614
Share dilution ratio
1.800
1.600
1.400
1.200
1.000
0.800
0.600
0.400
0.200
0.000
1.678
21.5
every quarter, at which financial, legal, internal audit
and other issues are reported. Issues reviewed by
supervisors and certified public accountants include
risk management, intercompany transactions,
changes in accounting policies, assessments of IPR
infringement risk, and reasonableness of provision
and accrual items to be presented on financial
reports.
4. Disclosure of Information & Financial Forecasts
HTC has been working diligently to enhance the
timeliness and transparency of financial disclosures.
In addition to online disclosure of important data
related to HTC's business in accordance with
regulations, HTC publishes revenue reports for
the preceding month earlier than required, while
unaudited quarterly results are released at the
beginning of the first month after the end of each
quarter. Quarterly earnings calls are held for investors
every quarter, at which revenue, margin and expense
forecasts are provided. Investor teleconferences are
also held to keep investors updated on the latest
business operations.
Apart from regular disclosures, HTC also participates
actively in investor forums and conferences in
Taiwan and overseas as well as proactively visits
major investment houses and investors to enhance
communication with the investment community.
5. Stable Dividend Policies
HTC has maintained consistent dividend policies over
the years. Factors considered in determining dividend
distributions include current and future investment
environments, capital needs, domestic / international
competition, and budgetary considerations.
Shareholder interests and the balance between
dividend distributions vs. longer-term financial
planning are also considered. The board of directors,
in accordance with regulations, sets a distribution
plan each year for submission to shareholders. HTC
has been able to maintain relatively high dividend
payments. In the most recent three fiscal years, HTC's
dividend payout ratio was above 60%.
The 2010 employee bonus appropriation rate for
accrued expenses is set at 18% of net profit after
taxes, prior to this employee bonus adjustment. The
actual bonus distribution must be approved by the
board of directors after final accounting figures for
the year have been published and approved by the
2011 shareholders meeting. During the past three
years, dilution ratio resulting from employee bonus
distributions has ranged between 0.6% and 1.7%.
HTC also conducts shares buybacks to minimize the
dilution eect of bonus distributions.
3. Board of Supervisor Proceedings
Meetings of the board of supervisors take place
2007 2008 2009
-
50
100
150
200
250
300
NT$ B %
NPAT
28.9 19.5
22.6 20.1
Cash Dividend Payout ratio
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0
70.3
28.6 20.1
89.0
67.3