Corporate Governance

Corporate Governance

TECO realizes the sustainable corporate development through rigorous fulfillment of The Company’s role as a corporate citizen based on the corporate vision of "Energy Conservation, Emission Reduction, Smart Application, and Automation" and the management philosophy of "Ethical Corporate Management, Implementation of Corporate Governance, Fulfillment of Social Responsibility and Pursuit of Sustainable Operations.

Board of Directors

The TECO board of directors is the highest executive organ of TECO and is authorized to appoint and nominate top managers. It is also in charge of formulation of CSR, corporate citizen, and sustainable development strategies. The three functional committees, namely Audit Committee, Remuneration Committee and Corporate Governance and Sustainability Committee, were established by the Board of Directors to assist the Board in performing its duties. The organizational charters of all committees which are required to report are subject to approval by the board.

The average tenure of directors is 7.27 years in 2023: 1 executive director 3.5 years; 4 independent directors 3.75 years; 6 other non-executive directors 10.25 years.

Senior Managerial Officer Remuneration

Senior managers conduct performance evaluations based on Key Performance Indicators (KPI) every quarter. 60% of the assessment items are linked to financial indicators (such as: operating income, operating profit, current profit and loss, total asset turnover, ROA, ROIC, etc.); 40% are linked to long-term planning and sustainable KPIs. "Sustainability KPI" includes three important indicators: GHG emissions, emission intensity and supply chain performance (assessed through GHG inventory). The KPI achievement rate is linked to the manager change bonus payment. In addition, internal carbon pricing (NTD1,600/ton) is implemented starting from 2023, which will further affect the profits of each business group, thereby affecting manager rewards.

Long-Term Incentive

Employee Stock Ownership Plans (ESOP), part of employee compensation is given in the form of a stock-holding trust, and the company stocks purchased can be deferred for two years before being claimed back. Through this system, the connection between the company's executive rewards and the company's mid- to long-term operating performance is strengthened.

CEO-to-Employee Pay Ratio

• The ratio of the annual total compensation of the highest-paid individual in the organization to the median annual total compensation of other employees in the organization (excluding the highest-paid individual) is 14.54
• The ratio of the median percentage increase in annual total compensation of the highest-paid individual in the organization to the average percentage increase in annual total compensation for other employees in the organization (excluding the highest-paid individual) is 17.9%
• Remuneration is calculated in accordance with national accounting standards.
• The ratio of the annual total compensation for the organization’s highest-paid individual to the mean annual total compensation for all employees is 11.83

Independence assessment for Independent Directors

Key Definitions Independent directors: are nonexecutive directors that are independent by meeting at least 4 of the 9 criteria (of which at least 2 of the 3 first criteria) listed below:

1. The director must not have been employed by the company in an executive capacity within the last year.
2.  The director must not accept or have a “Family Member who accepts any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current fiscal year”, other than those permitted by SEC Rule 4200 Definitions, including i) payments arising solely from investments in the company's securities; or ii) payments under non-discretionary charitable contribution matching programs. Payments that do not meet these two criteria are disallowed.
3. The director must not be a “Family Member of an individual who is [...] employed by the company or by any parent or subsidiary of the company as an executive officer.”
4. The director must not be (and must not be affiliated with a company that is) an adviser or consultant to the company or a member of the company’s senior management.
5. The director must not be affiliated with a significant customer or supplier of the company.
6. The director must have no personal services contract(s) with the company or be a member of the company’s senior management.
7. The director must not be affiliated with a not-for-profit entity that receives significant contributions from the company.
8. The director must not have been a partner or employee of the company’s outside auditor during the past year.
9. The director must not have any other conflict of interest that the board itself determines to not be considered independent.