HTC 2010 Annual Report Download - page 28

54 2 0 1 0 H T C A N N U A L R E P O R T 55
Corporate Governance
(IV) Total remuneration as a percentage of net income as paid by the Company, and by
companies included in the consolidated financial statements, during the past two fiscal
years to its Directors, Supervisors, General Manager, and Assistant General Managers,
and description of remuneration policies, standards, packages, procedures for setting
remuneration, and linkage to performance.
A. Total remuneration as a percentage of net income as paid by the Company, during the past two fiscal years to its
Directors, Supervisors, General Manager, and Assistant General Managers.
Title
Total remuneration as a percentage of net income
Increases or decreases %2010 2009
HTC All Consolidated Entities HTC All Consolidated Entities HTC All Consolidated Entities
Directors 0.05% 0.05% 0.06% 0.06% -0.01% -0.01%
Supervisors 0.01% 0.01% 0.02% 0.02% -0.01% -0.01%
President and Vice Presidents 3.32% (Note1) 3.87% (Note1) 306% (Note2) 3.31% (Note2) 0.26% 0.56 %
Note 1: During the current fiscal year up to the date of printing of this annual report, distribution list of employee bonus has not been decided yet. Estimated amounts of 2010 employee
bonus are calculated based on 2009 actual distribution ratio.
Note 2: Total remuneration for year 2009, related to amount of stock bonus, is calculated based on the closing price (NT$432.5) one day prior to the 2010 Annual General Shareholders'
Meeting on an ex-dividend basis (NT$387.14).
B. HTC's compensation policy provides remuneration based on the salary level for a given position within the given market,
the scope of responsibilities of that position within the company, and the employee's contribution to the company's
operational goals. Company procedures for setting compensation provide fair levels of remuneration in consideration of
the overall operational performance of the company as well as the employee's achievement of individual performance
goals and contribution to the company's performance. If, in addition to the fixed annual bonus (two month's salary in
Taiwan, one month's salary in China and certain Southeast Asian countries, and one month's salary in Brazil), distribution
of additional annual bonuses is proposed, a resolution approving the special bonuses must be passed by the Board of
Directors.
II. The State of the Company's Implementation of Corporate Governance:
(1) The State of Operations of The Board of Directors:
The Board of Directors conducted eleven meetings in 2010. The Directors and Supervisors' attendance status is as
follows :
Title Name
Addendance in
Person (B) By Proxy
Attendance Rate in
Person(%) [B/A] Notes
Chairman Cher Wang 8 3 72.73% Elected again in 18 June 2010 Shareholders' Meeting.
Director Wen-Chi Chen 8 3 72.73% Elected again in 18 June 2010 Shareholders' Meeting.
Director HT Cho 9 2 81.82% Elected again in 18 June 2010 Shareholders' Meeting.
Director Tan Ho-Chen 10 0 90.91% Elected again in 18 June 2010 Shareholders' Meeting.
Independent Director Chen-Kuo Lin 11 0 100.00% Elected again in 18 June 2010 Shareholders' Meeting.
Independent Director Josef Felder 4 7 36.36% Elected again in 18 June 2010 Shareholders' Meeting.
Supervisor Wei-Chi Investment Co., Ltd.
Representative: Shao-Lun Lee 8 0 72.73% Elected again in 18 June 2010 Shareholders' Meeting.
Supervisor Caleb Ou-Yang 0 0 0.00% Elected again in 18 June 2010 Shareholders' Meeting.
Supervisor Po-Cheng Ko 11 0 100.00% Elected again in 18 June 2010 Shareholders' Meeting.
Resigned on 20 April 2011.
Other matters to be included:
the "Guidelines for Corporate Governance" were completed and
adopted, guaranteeing that the Board of Directors has the authority
to independently supervise corporate operations and to make all
decisions necessary to fulfill its responsibilities to shareholders and
to society.
2. In accordance with the Compensation Committee Articles of
Incorporation drafted by the Board of Directors, the Compensation
Committee shall be composed of three Directors with the Chairman
of the Board as ex ocio Chairman and the remaining two
appointed by the Board of Directors, and it shall include at least one
Independent Director. HTC, in its Board meeting of 21 June 2010,
appointed Director HT Cho and Independent Director Chen-Kuo
Lin to the second session of the Compensation Committee, while
Chairman Cher Wang was made its Chairman. The principal duties
of the Compensation Committee include assisting the Board of
Directors in supervising the company's compensation system and
making appropriate recommendations to the Board.
3. Currently, prior to the establishment of the audit committee, most
of the committee's functions are performed by the Supervisors
meetings. That is, in accordance with Article 14-5 of the Securities
and Exchange Act, matters intended to be handled by the audit
committee are first passed to the Supervisors meeting before
submission to the Board of Directors for deliberation and voting. In
addition, regular Supervisors meetings are convened on a quarterly
basis to hear reports on important financial, legal, and internal audit
matters. There is also a joint assessment between the Supervisors
and CPA on the principles and appropriateness of various allowances
and reserves in the financial statements.
4. HTC has also been endeavoring in recent years to enhance the
timeliness and transparency of its information disclosure. In addition
to making timely posting of important financial and business
information on the Market Observation Post System, HTC also
provides early announcement of its monthly revenues, announces
preliminary revenue figures at the beginning of the month following
the end of each quarter, and convenes online investor conferences
on a quarterly basis to allow investors timely access to information
on the Company's operations and performance. In December 2008,
the HTC Investor Relations Website was revised. A special corporate
governance page was added along with disclosures of financial
information. HTC achieved "A+" rating for the first time in the sixth
Information Disclosure and Transparency Ranking organized by the
Securities and Futures Institute (SFI). In the seventh evaluation, HTC
was recognized as one of the top 10 public companies with "A+"
ratings. In three consecutive evaluations, HTC was listed as one of
the more transparent among exchange or OTC listed companies in
making voluntary disclosure of information.
(2) Supervisor participation in Board of Directors meetings
The Board of Directors conducted eleven meetings in 2010. The Supervisors' attendance status is as follows :
Title Name Addendance in Person(B) Attendance Rate (%) [B/A] (Note) Notes
Supervisor Wei-Chi Investment Co., Ltd.
Representative: Shao-Lun Lee 8 72.73% Elected again in 18 June 2010 Shareholders' Meeting.
Supervisor Caleb Ou-Yang 0 0.00% Elected again in 18 June 2010 Shareholders' Meeting.
Supervisor Po-Cheng Ko 11 100.00% Elected again in 18 June 2010 Shareholders' Meeting.
Resigned on 20 April 2011.
Other matters to be included:
1. There was no independent director expressing opposition or reservation
with respect to any Board of Directors meeting during the preceding
fiscal year, and no written record or written statement of related board
resolutions.
2.
Directors' abstention from discussion due to conflicts of interests in 2010:
(1) Independent Director: Chen-Kuo Lin, Josef Felder
Content of proposal: Review and discussion of the Independent
Director nominees list, proposed by the Board of Directors, for
election at the 2010 Annual General Shareholders Meeting.
Reason for abstention from voting participation: Chen-Kuo Lin and
Josef Felder are nominated candidates for Independent Directors.
(2) Director: HT Cho
Content of proposal:Proposal on the donation of NTD 300 million to
HTC Cultural Educational Foundation and HTC Foundation.
Reason for abstention from voting participation: Director HT Cho
is Chairman of the HTC Cultural Educational Foundation and HTC
Foundation-the subject recipients of the donation under this
proposal.
(3) Director: Cher Wang, Wen-Chi Chen
Content of proposal: Proposal to acquire real property from a
related party, VIA Technologies, Inc.
Reason for abstention from voting participation: Chairman Cher
Wang and Director Wen-Chi Chen are Chairman and President &
Director of VIA Technologies, Inc.-the trading counterpart under
this proposal.
3. Measures taken to strengthen the functionality of the Board of Directors
and the status of implementation during current and preceding fiscal
years:
1. At the time of end-of-term elections for Directors and Supervisors
in the 2010 fiscal year, HTC selected two Independent Directors in
accordance with the provisions of the Securities and Exchange Act
in order to strengthen the independence and functions of Directors
and enhance the operational eectiveness of the Board. In 2008,
I. Composition and Responsibilities of Supervisors:
The structure of the Supervisors' Meetings at HTC is well established and it
carries out most functions of the audit committee.
1. Supervisor communication with employees and shareholders (e.g.,
channels and methods of communication)
Supervisors can make use of channels such as Supervisors Meetings,
Board of Directors meetings, Shareholders Meetings, and internal audit
reports to communicate with management-level ocers and with
shareholders.
2. Supervisor communication with Chief Internal Auditor and CPAs (e.g.,
financial and operational matters on which they communicate, their
methods, and results)
HTC Supervisors communicate through their regular quarterly Supervisor
Meetings with HTC's financial, legal, and internal audit ocers, who report
to the Supervisors on issues such as risk management, major litigations,
and internal audit reports.
Based on the principle of sound, conservative accounting, HTC's
Supervisors and CPAs regularly undertake joint reviews of major account
items in the financial statements to assess the reasonableness of basic
assumptions underlying various allowances and reserves. Assessments are
also performed and reserves taken against potential liabilities associated
with intellectual property risks in order to reduce the impact on HTC's
finances.
Supervisors also hold regular private meetings with CPAs. Supervisors
must first review and be satisfied with the CPA's independence and
professional fees before such matters are submitted to the Board of
Directors for resolution.
During 2010, management continued to lend its full support to
corporate governance at HTC. Internal controls are risk-oriented and
eciency in ratifying issues continue to improve. In the supervision
of subsidiaries, emphasis was placed on evaluation by corporate
headquarters and the development of global policies. In the area
of internal control self-assessment, HTC has continued to use a
combination of questionnaires and small group discussions. Individual
divisions also need to issue internal control statements to provide
a concrete and transparent basis for the issuance of statements on
corporate internal controls by the Board of Directors.
II. If Supervisors in attendance at a Board meeting state opinions, the
meeting date, session number, agenda, and result of resolutions must
be noted, along with the Company's handling of the Supervisors'
opinions.
Prior to each quarterly meeting of the Board of Directors, HTC convenes
a Supervisors meeting at which important matters relating to finance,
legal, and internal audit are reported to the Supervisors. The Supervisors
in turn produce a quarterly Supervisors' report for submission to the
Board. Important related-party transactions are first submitted to the
Supervisors meeting, which must first review the transactions and issue
an unqualified opinion before they are submitted for deliberation and
resolution by the Board. There has been no instance of a Supervisor
expressing a dissenting opinion regarding a Board resolution during the
most recent fiscal year.