Strengthening Governance Functions

Board of Directors’ Independence and Diversity

To maintain the board’s independence, external directors (including independent directors) continue to account for more than half of the seats on the board. Also, no independent directors have effective terms of longer than nine years, ensuring that their independence will not be compromised by serving in the same role for too long and that they will fulfill their duties objectively.

The Company actively promotes diversity in the compostion of its board of directors by pursuing a balance of professional skills and gender in the hope of bringing together people of different backgrounds and visions to get a broader range of views and strengthen the decision-making process. In 2015, the Company amended "The Procedures for the Election of Directors" to clearly stipulate that the composition of the board members shall take into consideration certain basic criteria including gender, age, nationality, and culture in addition to professional background, industry experience, and other professional knowledge and skills. As of Feb. 29, 2020, Fubon Financial Holdings’ board of directors included one independent director who is a foreign national and three directors who are women.

Seats on the Boards of Fubon Financial Holdings and its Subsidiaries

Date:2020/5/6

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Board of Directors’ Operations

Fubon Financial Holdings’ board of directors meets at least once per quarter. In 2019, it held seven regular meetings and the actual attendance rate was 94% (100% if attendance by proxy was included). The self-assessment questionnaire for the board of directors’ performance evaluation has set standard scores for different attendance rates (such as 3 points for an average attendance rate of 80%, 4 points for an 85% attendance rate, and 5 points for a 90% attendance rate.)

In order to establish a good corporate governance environment, the Company has established important corporate governance systems such as the "Human Rights Policy", "Code of Ethical Conduct", "Ethical Coporate Management Best Practice Principles", "Corporate Social Responsibility Best Practice Principles", and " Performance Evaluation Policy for the Board of Directors and Its Functional Committees." The Company also continues to revise internal regulations in order to keep up with domestic and foreign corporate governance systems as well as legal and practical operations.

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An overview of important company rules and guidelines formulated and passed or amended by the board of directors in 2019 is as follows:

Board of director rules and systems Policy on Managing Board Director Nominations and Shareholder Proposals, Rules Governing Procedures for Meeting of Board of Directors
Corporate Governance Corporate Governance Best Practice Principles, Audit Committee Organizational Rules, Remuneration Committee Charter, Corporate Governance and Sustainability Committee Charter
Risk Management Personal Information Protection Policy
Compliance Whistleblowing Policy
Anti-Money Laundering Group Policy for Anti-Money Laundering and Countering the Financing of Terrorism

For details concerning important resolutions reached by the Board of Directors in 2019, please refer to Section 3.4.13 (3) "Significant resolutions by the Board of Directors" on pgs. 163-165 of the 2019 Annual Report.


Board of Directors’ Performance Evaluation

In order to establish a director feedback mechanism to improve the effectiveness of the board of directors' operations, the Company conducts evaluations based on the “Performance Evaluation Policy for the Board of Directors and Its Functional Committees.” The Company's board of directors and functional committees undergo an internal performance evaluation based on various indicators at the end of each year. Internal and external performance evaluations shall be completed and submitted to the board of directors' meeting that is to be convened within three months from the beginning of the following year. The 2019 performance of the board of directors and its functional committees were reported and discussed during the board meeting in March 2020. For more information, please see the official website or 2019 Annual Report 3.4.1 (4) b pgs. 58-60.

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Internal Evaluation

  • Evaluation of the board’s performance

Of the 51 indicators evaluated, 24 showed improvement from last year while the scores for most of the other indicators remained unchanged.

Area of assessment Average Score
2019
Participation in the Company's operations 4.9
Improvement of board's decision quality 4.9
Composition and structure of the board of directors 5.0
Election and continuing education of directors 4.9
Internal controls 4.9
Participation in sustainable management (ESG) 4.9

Note: The scoring rubric consists of five levels: Excellent (5), Very Good (4), Good (3), Satisfactory (2), and Improvement Needed (1). The maximum performance review score is 5 points.


  • Board members' (self-assessment) performance evaluations

Evaluation criteria covered six major categories and included 25 indicators. Indicators in the "Internal Control" category include the directors’ supervision of the effectiveness of risk management. Fubon Financial Holdings directors monitor major risks to the Company and climate change risks through regular risk management reports. In 2019, scores improved for 13 indicators and remained unchanged for most of the others.

Area of assessment Average Score
2019
Comprehension of the Company's targets and missions 4.8
Awareness of director’s duty 5.0
Participation in the Company's operations 4.9
Management and communication of internal relationships 4.8
Professionalism and continuing education of directors 5.0
Internal controls 4.9

Note: The scoring rubric consists of five levels: Excellent (5), Very Good (4), Good (3), Satisfactory (2), and Improvement Needed (1). The maximum performance review score is 5 points.


  • Performance Evaluation of Functional Committees

Evaluation criteria covered five major categories, and of the 23-24 indicators used, those in the "internal controls" category included how committee members need to understand major ESG issues related to different companies’ industries. That enables them to stay connected with the sustainable development trends of domestic and foreign financial companies while supervising the Company’s implementation of ESG practices.

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Area of assessment Audit Committee Remuneration Committee Corporate Governance and Sustainability Committee
Participation in the Company's operations 4.8 5.0 4.9
Improvement of committee decision quality 5.0 5.0 5.0
Composition and structure of the committee 5.0 5.0 5.0
Election and continuing education of committee members 5.0 5.0 5.0
Internal controls 5.0 5.0 5.0

Note: The scoring rubric consists of five levels: Excellent (5), Very Good (4), Good (3), Satisfactory (2), and Improvement Needed (1). The maximum performance review score is 5 points.


  • Corrective Measures:

The results of the 2019 performance evaluation were generally better than in 2018. For one indicator where performance declined – “is the interaction between board members and top management good?” – the plan is to provide documents to the directors who take office after the eighth board election on the Company’s businesses and reference information on director responsibilities. The information will cover the Company’s organizational structure, profiles on the board of directors and committee members and their respective responsibilities, introductions of key managers, board director remuneration and insurance, and important Company regulations and laws that board directors must comply with. Meetings between top executives and board directors will also be arranged to help the executives understand each director’s requirements, help the directors with their jobs and compliance issues, and strengthen the interaction between directors and management.


External Evaluation

Accroding to the Fubon Financial Holdings’ "Performance Evaluation Policy for the Board of Directors and Its Functional Committees," the Company’s board performance evaluation shall be conducted by an external independent professional institution or a panel of external experts and scholars, or conducted using other appropriate methods at least once every three years. The performance evaluation for the current year shall be conducted at the end of the year. In 2018, the Company appointed the Taiwan Corporate Governance Association to conduct the first performance evaluation of its board of directors to continue to improve its effectiveness and strengthen corporate governance mechanisms through the objective suggestions of external, independent institutions.


Directors’ Continuing Education

The company puts a premium on the continuing education of board members and has initiated “Directions for the Implementation of Continuing Education for Directors" to help directors keep up with the latest corporate goverance and CSR concepts. The Company invites experts and scholars from relevant fields as lecturers for the "in-house lecture" courses held for the directors and supervisors of Fubon Financial Holdings and subsidiaries each year. From time to time, the Company also provides diversified courses or seminars held by external institutions.

The courses in 2019 were as follows:

Date Course Name Instructor
2019.06.14 Introduction of IFRS 17 and Its Impact on the Life Insurance Industry KPMG accountant Tan Tan Chung
2019.10.18 Regulations on Financial Institution Interested Party Transactions and Case Studies: A Case Study of an Insurance Guaranty Fund Taking over a Life Insurance Company Taiwan Guaranty Fund Chairman and National Taipei University Department of Law professor Kuo-bin Lin
2019.12.06 Strategies of Information Security for Directors / Supervisors BSI Northeast Asia Managing Director Peter Pu

The Company also provides board members information on diverse courses or seminars offered by outside organizations, such as courses on ESG-related topics, compliance issues, financial reporting information, and risk management, to encourage directors to continue their education. In 2019, the Company’s board directors all completed the required six hours of continuing education, and they attended 185.5 hours of courses in total. For more details on the directors’ continuing education, please see Section 3.4.1 on Functionality of Board of Directors, Part e. Refinement of directors’ professionalism in the Company’s Annual Report (pgs. 61-69).

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