Professional Qualifications and Independence of the Board
Cathay FHC has the "Corporate Governance and Nomination Committee" and implements the "Nomination System for Candidates." All of the candidates for the Board of Directors are nominated and qualified for review by the Corporate Governance and Nomination Committee. After the qualifications of all candidates for directorship are reviewed and approved by the Committee and the Board of Directors, the list of qualified candidates is then submitted to the shareholders' meeting for election. According to Paragraph 3, Article 30 of the Cathay Financial Holdings Corporate Governance Best Practice Principles, the members of the Board of Directors shall possess the knowledge, skills, and experience necessary for performing their duties. To achieve the ideal goal of corporate governance, the Board of Directors shall possess the following abilities:
1. Ability to make operational judgments;
2. Ability to perform accounting and financial analysis;
3. Ability to conduct management administration (including ability to conduct management subsidiaries);
4. Ability to handle crisis management;
5. Knowledge of the industry;
6. An international market perspective;
8. Ability to make policy decisions;
9. Risk management knowledge and skills.
Cathay FHC completed the Election of the 7th Board of Directors in 2019 and increased from 3 to 4 Independent Directors. 2 new Independent Directors, Ms. Li-Ling Wang and Mr. Tang-Chieh Wu, possessing professional experiences and knowledge in insurance, securities, risk management, fiscal and financial industry can effectively improve the diversity of Cathay FHC's Board of Directors and the effectiveness of corporate governance. All members of the Board of Directors who are also professionals and well-experienced in finance, business, payment finance, digital information, overseas markets, mergers and acquisitions and risk management can contribute to promoting development strategies of “Internationalization”, “Digitalization” and “Financial Innovation and Application” of Cathay. Cathay FHC’s Board of Directors had convened 10 meetings with an attendance rate of 90% in 2019. Directors on average serve 8.3-year terms.
The composition of Cathay FHC’s Board of Directors is diverse and it includes different ages, industrial experiences and professional knowledge and competencies. In order to strengthen corporate governance and facilitate the sound composition and structure of the Board of Directors, Cathay FHC indicates the board diversity policy in Paragraph 2, Article 30 of the “Cathay Financial Holdings Corporate Governance Best Practice Principles” as follows: the composition of Board shall be determined by taking due consideration to the company operational framework, business development direction, future development trends and various needs, and it is advisable to assess aspects of diversity including but not limited to basic composition(e.g., gender, age, nationality and race), professional experience (e.g., finial holdings, banks, insurance, securities, industries and technology), and professional knowledge and skills (e.g., commerce, finance, accounting, legal, marketing and digital technology). Cathay FHC’s Board consists of 13 Directors, including 8 Non-Executive Directors, 4 Independent Directors, and 1 Executive Director (Cathay FHC president Chang-Ken Lee). All members possess extensive experiences and expertise in finance, payments, information technology, commerce, overseas markets, mergers and acquisitions, and management fields. Cathay FHC’s Directors with employee status (Cathay FHC president Chang-Ken Lee) comprises 8%, and Independent Directors comprises 31%. The average serve term of the four Independent Directors is 2 years (3 Independent Directors with the serve term is less than 3 years, and the other Independent Director with the serve term is 3.5 years.). The average age of Board Members is 65, and 4 Directors are 71-77 years old, 6 Directors are 61-70 years old and 3 Directors are 51-60 years old. The implementation of Board Members’ diversity policy is as follows:
Cathay FHC's Implementation of the Board Diversity Policy
Furthermore, Cathay emphasizes gender equality in the composition of its Board of Directors. Cathay FHC’s newly recruited Ms. Li-Ling Wang, the Chairman of the Pension Funds Association in Taiwan, joined as the Independent Director in Cathay FHC from the 7th Board of Directors on June 14, 2019, and she also joined as the Independent Director of Cathay Life Insurance starting on June 26, 2019. In addition, in order to enhance the Board diversity of Cathay’s subsidiaries, starting from the 5th Board of Directors meeting on June 20, 2016, Cathay Securities’ newly recruited Ms. Tina Pan, the Chairman of the Modern Women's Foundation, joined as the Independent Director.
Evaluation of the Board and Functional Committee’s Performance and Third-party Certification
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.
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.
Since June 15, 2007, Cathay FHC has purchased liability insurance 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.
Valuing the Rights and Interests of Shareholders
Cathay FHC's website has a "shareholders' section" that announces information on shareholders' meetings, dividends, and financial information. There is also a spokesperson system, investor services, and "contact us" mailbox for shareholders to express their opinions at any time. Cathay carefully handles all suggestions, questions, disputes, and litigations involving shareholders in accordance with the “Cathay Financial Holdings Guidelines for Handling Shareholder Suggestions, Questions, Disputes, and Litigation." The Company actively supports electronic voting and candidate nomination system in director/supervisor election as a means to empower and make voting more convenient for its shareholders. The candidate nomination system has been adopted since the 2016 director re-election, and the percentage of votes executed in electronic form has exceeded 50%.