Corporate Governance

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● Governance Framework

To establish a solid corporate governance system, SinoPac Holdings has established the "Corporate Governance Guidelines" in accordance with the “Corporate Governance Best Practice Principles for Financial Holding Companies" and the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies".
SinoPac Holdings has set up three functional committees including the Remuneration Committee, Audit Committee, and Ethical Corporate Management Committee in accordance with the "Remuneration Committee Organizational Charter", "Audit Committee Organizational Charter", and "Ethical Corporate Management Committee Organizational Charter ".

● Shareholding Structure

  • SinoPac Holdings discloses its shareholder structure as shown in the table below. Shares held by government entities account for less than 5 %.

  • Percentage of Shares Held by Family Members

More than 5% of the shares of the Company is held by the substantial shareholder S.C. Ho and the companies which he holds more than 50% of the shares. S.C. Ho and the same related party declared their holding of 20.55% of SinoPac holdings’ shares on March 31, 2021 (major shareholders and the same related party with more than 10% of shares). Please refer to the "inquiries on the reports on the change of shareholding by major shareholders of banks (financial holding companies)" on the Market Observation Post System (stock code: 2890).

● Composition and Operations of the Board of Directors

  • Composition of the Board of Directors

SinoPac Holdings' 7th Board of Directors consists of seven Directors including three Independent Directors, one Executive Director (Director Stanley CHU serves concurrently as the President of SinoPac Holdings), and three non-executive Directors. The average tenure of the board members as of May 12, 2021 was 3.4 years. The Company values diversity in the composition of the Board of Directors and elected Ms. Shi-kuan CHEN as the Chairman on May 13, 2020. SinoPac Holdings thus became the first private financial holding company in Taiwan to have a female chairman and attained the provisional target of having at least one female director.
The 7th Board of Directors consists of one female director and six male directors with an average age of more than 55 years old. The members include three PhDs and four masters with diverse backgrounds and experience in finance and other industries. Chairman Ms. Shi-kuan CHEN is an expert in international economics, macroeconomics, and international financial management, and is familiar with the operation of the financial industry. Director Mr. Stanley CHU has extensive leadership experience in the financial industry and a comprehensive understanding of the businesses of SinoPac Holdings. Director Mr. Chi-hsing YEH is an expert in information security, financial supervision technology, and anti-money laundering, and also a professional lawyer. Director Mr. Wei-thyr TSAO is a renowned investment banker with extensive experience in international investment banking and finance. Independent Director Mr. Chi SCHIVE is a prominent economist with extensive experience in administration. Independent Director Mr. James J. SHEU possesses complete qualifications in the financial industry and expertise in accounting and risk management. Independent Director Mr. Wei-ta PAN has a strong background in law, both professionally and in practice. Based on the professional skills of these seven directors, the Board of Directors as a whole possesses a wide range of skills, including the abilities to make operational judgments, perform accounting and financial analysis, perform business management, perform crisis management, knowledge of the industry, an international market perspective, leadership, decision-making, and risk management.

  • Board Nomination and Election System

The selection of board members of SinoPac Holdings is mainly based on professional skills, industry experience, ethics, and reputation in society. The Company also sets diversity criteria for gender and age. The Board of Directors as a whole possesses 9 major capabilities including perform operational judgments, accounting and financial analysis, business management (including management of the subsidiaries), crisis management, knowledge of the industry, an international market perspective, leadership, decision-making, and risk management skills.

  • Operations of the Board of Directors

As a principle, SinoPac Holdings' Board of Directors convenes one meeting each month and the minimum of attendance for all members required is 80%. Thirteen meetings of the Board of Directors were held in 2020 and the average board meeting attendance was 98.96%. The average board meeting attendance of Directors is included as an evaluation item in the performance evaluation of individual Directors. Directors that have conflicts of interests in resolutions would recuse themselves from voting in accordance with laws. Companies of the SinoPac Holdings Group have purchased the liability insurance for directors, supervisors, and managers since 2003 and review the contents of insurance policies eachyear. The Company established the "Standard Operating Procedures for Requests Filed by Directors" to respond to requests of Directors, help Directors perform their duties, and improve the performance of the Board ofDirectors.
SinoPac Holdings uses the TSE Market Observation Post System, corporate website, and annual reports to disclose the Directors' education/training and attendance in the Board of Directors. Major resolutions are disclosed in the Annual Report (extracts of the meeting minutes of the Board of Directors are disclosed on the company website) as well as recusals of Directors from agenda items due to conflicts of interests to improve information transparency in the operations of the Board of Directors.

  • Board Performance Review

SinoPac Holdings has established the Regulations Governing the Evaluation of the Performance of the Board of Directors in 2018. The performance of the Board of Directors and functional committees should be reviewed according to the review procedures and indicators set forth in the Regulations on an annual basis. The performance review of the Board of Directors and functional committees shall be conducted by an external professional independent institution or a team of external experts and scholars at least once every three years, and the results of performance review shall be reported to the Board of Directors before the end of March in the following year. For the scoring criteria, each review item is scored using the weight method, and performance evaluation results are divided into five levels, namely excellent, very good, good, fair, and poor. The evaluation items are specified below :

In 2019, SinoPac Holdings appointed EY Business Advisory Services Inc. to conduct the external performance review of the Board of Directors for 2019. In 2020, SinoPac Holdings organized an internal self-evaluation for the performance review of the Board of Directors, individual Directors, Audit Committee, Remuneration Committee, and Ethical Corporate Management Committee. The results of the self-evaluation were "excellent", which showed that the Directors and members of the Committees had positive views of the efficiency and effectiveness of the operations of the Board of Directors and functional committees and the overall operations were excellent. The Company will continue to improve the performance of the Board of Directors and functional committees. The results were reported to the Board of Directors on February 26, 2021 and the results of the performance evaluation of individual Directors were used as the basis for establishing the Directors' remuneration for 2020 and the nomination and renewed appointment of the next Board of Directors.

● Sustainable Development Committee

  • Sustainable Governance Framework

SinoPac Holdings established the "CSR Project Team" in 2015 to actively plan CSR related affairs. In 2018, the Company established the "Guidelines for Corporate Social Responsibility” and established the "Sustainable Development Committee". The Chairman of SinoPac Holdings serves as the chairperson of the Committee, with the President of SinoPac Holdings and the chairmen and presidents of major subsidiaries serving as members. The Committee oversees five task forces responsible for corporate governance, customer relations, employee welfare, social involvement, and environmental protection. The committee is in charge of managing the risks and impacts of operations of SinoPac Holdings and its subsidiaries on the economy, environment, and society, and it regularly reports to the Board of Directors to implement SinoPac Holdings' sustainable development strategy .

 

  • Operations of the Sustainable Development Committee

The task forces of the Sustainable Development Committee uphold the four major sustainability missions of SinoPac Holdings and continue to implement adjustments and optimize the short, medium, and longterm goals in the Sustainable Development Strategy Roadmap in accordance with the five major sustainability targets. The Sustainable Development Committee convenes a meeting every quarter and reports the progress of corporate sustainable development to the Board of Directors every six months. The Sustainable Development Committee convened four meetings in 2020 and reported the results of sustainable development in 2020 and the 2021 work plan to the Board of Directors in January 2021. SinoPac Holdings also received awards from the Taiwan Academy of Banking and Finance, Commonwealth Magazine, The Asset magazine, Enterprise Asia, and Taiwan Institute for Sustainable Energy in 2020 for its sustainable development, and continued to be included as a constituent of the FTSE4Good TIP Taiwan ESG Index and FTSE4Good Emerging Indexes.

● Senior Executive Remuneration Policy

  • Senior Executive Remuneration System

The remuneration for the President and Vice President (senior executives) of SinoPac Holdings is based on their individual professional qualifications and experience and the prevailing rates in the industry, discussed in the remuneration committee, and then submitted to the Board of Directors for approval. In addition to the fixed monthly base salary and allowances, the Company issues performance bonuses and long-term incentives according to the Company's rules with consideration of the overall annual business performance, personal performance, and future risks in the medium to long-term strategy of SinoPac Holdings.

  • Long-Term Performance Alignment

To balance short-term and long-term remuneration, business performance and personal performance, and cash and non-cash remuneration, SinoPac Holdings established the Long-Term Performance Alignment Program and designed the deferral of the performance bonus with a vesting period for variable compensation of up to 5 years. The proportion of President and Vice President’s (senior executives) long-term incentive deferral is equivalent to more than 20% of the performance bonus, which is deferred by way of virtual shares and employee stock ownership connected to the value of the shares of SinoPac Holdings, so that the remuneration of managers is closely connected to the short-term business performance and long-term development of SinoPac Holdings. The conditions for unlocking medium to long-term incentives in the trust scheme include the financial performance of SinoPac Holdings and its subsidiaries (including but not limited to the ROE), effectiveness of the implementation of long-term strategies, TSR shareholder value and risk management, and corporate governance targets in the next 3 years. They connect managers' obligations and responsibilities to long-term performance. In addition, where a manager violates laws or professional ethics, or commits acts of negligence or dereliction of duties, the Company may adjust the distribution ratio orimplement a trigger clawback provision of distributed incentives.

  • Executive Remuneration

In 2020, total remuneration paid by SinoPac Holdings to senior executives accounted for 0.67% of the net profit after tax. The remuneration paid by all companies in the consolidated financial statements to senior executives ranked President and Vice Presidents of SinoPac Holdings accounted for 1.68% of the net profit after tax of SinoPac Holdings’ consolidated financial statements. Refer to P26 of the 2020 Annual Report of SinoPac Holdings for related information on their remuneration. There are no share ownership requirements for the CEO and other members and executive committee. As of the end of 2020, the President of SinoPac Holdings held 0 shares and the average across other executive committee members (excluding the President) owning shares accounted for 0.78 of the multiple of base salary.