Structure and Operations of the Board of Directors

The Board of Directors is the highest level decision-maker at Cathay FHC, and supervises the Company's overall operational management. The Board of Directors convened 8 meetings in 2021 with an attendance rate of 91%; directors on average have held the position for 11 years. Cathay FHC established the Audit Committee, Remuneration Committee, and Corporate Governance and Nomination Committee under the Board of Directors to improve the Board's efficiency. The committees are responsible for reviewing proposals. All proposals are reported to and discussed by the Board of Directors to effectively implement its independent supervision and checks and balances mechanism, and also to oversee resolutions and actions. If there is a conflict of interest with the director or the institution represented by the director, the director shall recuse him/herself, so that benefits are maximized for all stakeholders.

 

Professional Qualifications and Independence of the Board

Cathay FHC adopts the candidate nomination system. All director candidates are nominated and their qualifications are reviewed by the Corporate Governance and Nomination Committee. After candidates are approved by the Board of Directors, they are elected and appointed during the shareholders' meeting. According to Paragraph 3, Article 30 of Cathay FHC's Corporate Governance Best Practice Principles, the members of the Board of Directors shall possess the knowledge, skills, and experience necessary for performing their duties. In response to issues concerning corporate governance and corporate sustainability in Taiwan and abroad, the directors of Cathay FHC actively participate in relevant internal and external training, which covers issues including risk management, corporate governance, corporate social responsibility, AML/CFT, and information security. The average training hours for the directors stood at approx. 11 in 2021.

Board Diversity

Members of Cathay FHC's Board of Directors come from diverse backgrounds, including different industries, academic backgrounds, and professional knowledge and abilities. The Board has 1 female independent director to increase Board diversity.

 

To implement corporate governance and improve the Board and Functional Committee’s efficacy, Cathay FHC pays special attention to the overall operations of the Board and Functional Committee and thus set up the Regulations Governing the Evaluation of the Board and Functional Committee’s Performance in addition to the Guidelines for Evaluation of Directors' Performance and the Guidelines for Directors' Remuneration. Performance indicators, such as compliance, corporate governance, risk management, and corporate sustainability and corporate social responsibility, were also incorporated in the Regulations Governing the Evaluation of the Board and Functional Committee’s Performance to ensure the Board and Functional Committee’s fulfillment of corporate governance, operations, and corporate social responsibility. In 2021, the result of Cathay FHC's Board and functional committee performance evaluation was “above standard.”

To strengthen the independence and effectiveness of the Board performance evaluation, Cathay FHC will appoint an external independent institution or an expert to carry out the Board performance evaluation once every three years, starting from 2017. Cathay FHC has commissioned the "Taiwan Institute of Ethical Business and Forensics" to conduct the external performance evaluation of the company's Board of Directors in 2019, and discusses and implements enhancement measures in accordance with the Institute's optimization recommendations. For the results of Cathay FHC's internal and external Board and functional committee performance evaluations in 2020, please see our 2020 Annual Report P.44-50.

In order to lower the risks taken on by directors, supervisors, and the Company in general, Cathay FHC has purchased liability insurance since 2007 for its Directors, supervisors, and key staff members, including those from its subsidiaries. This is in line with the legal requirements during their terms in office. The contents of the insurance policy are reviewed annually and reported to the Board after the policy is renewed each year.

 

Remuneration of Senior Management

Manager performance evaluations and the remuneration policy, system, standard, and structure are reviewed by the Remuneration Committee of Cathay FHC, and then submitted to the Board of Directors for resolution. Our goal is for managers to fulfill their duties to improve our long-term business performance, and further achieve our business strategies and ensure shareholders equity. Cathay carries out performance management and pays remuneration in accordance with the Manager Performance Development Guidelines and Guidelines for Remuneration of Senior Management. The performance of managers is evaluated based on annual goal attainment, and results serve as the basis for remuneration. For more information on remuneration of Cathay FHC’s CEO, please refer to 2020 Cathay FHC's Report on Remuneration of the President.


We attach great importance to shareholder communication (see P.138 of the Annual Report for our shareholder structure), and set up an "Investor Section," "Corporate Governance Section," and "Corporate Sustainability Section" on our website to provide information on our financial position, business performance, and corporate governance in both Chinese and English. Furthermore, we have an Investors Relations Department that periodically convenes investor conferences and handles investor related issues whenever they occur. This ensures the right of investors to inquire and fully understand information on the Company's financial position and business performance. We organized 8 investor conferences in 2020. Shareholders can express their opinions at any time through various communication channels, including the spokesperson system, investor services, and the "Contact Us" mailbox.

We actively support the FSC in promoting electronic voting, which will make it more convenient for shareholders to vote during shareholders' meetings, as well as the FSC's director and supervisor candidate nomination system, in order to encourage shareholder engagement. Over the years, electronic votes cast during shareholders' meetings of Cathay FHC have surpassed half of all shares in attendance.


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