Board of Directors Operation

In accordance with the Company's Articles of Association, the Rules for Election of Directors, and Corporate Governance Best Practice Principles, candidate nomination system is adopted to elect Board of Directors in a fair, just, and open procedure. The "Rules for Election of Directors" is stipulated and board diversity policy in specified in “Corporate Governance Best Practice Principles”. Based on the Company's business operations, operating dynamics development needs and considering stakeholder perspectives, the criteria of the professional background, professional skills, industry experience, gender, age, nationality, etc. which the directors should possess is stipulated and includes, but not limited to, the following two general standards:

All members of the board shall have the knowledge, skills, and experience necessary to perform 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.
4. Ability to conduct crisis management.
5. Knowledge of the industry.
6. An international market perspective.
7. Ability to lead.
8. Ability to make policy decisions.

At the general meeting of shareholders on June 24, 2020, WPG Holdings elected the sixth Board of Directors for a term of 3 years from 2020/6/24 to 2023/6/23. The sixth term Board of Directors consists of 11 members (including 4 Independent Directors). In addition to the electronic components industry, the professional background of the Board covers investment management, strategic management, financial accounting, law, and global market mindset. Among the Board, 2 members are concurrent employees (including appointed manager) (18% of the Board), and 4 members are independent directors (36% of the Board). There is currently 1 female director (achieved the target of at least 1; 9% of the Board). In terms of age, 2 members are over 70 years old (18% of the Board), while the remaining 9 members are in the age group of 50-70 years old (82% of the Board). There are 3 independent directors with tenure of less than 3 years, and 1 independent director with tenure of more than 9 years. The average tenure of all directors is 11 years.

There are 3 independent directors with tenure of less than 3 years, and 1 independent director with tenure of more than 9 years.  Among them, though Jack J.T. Huang has served as the independent director of the company for more than three consecutive terms, despite his long tenure, Mr. Huang was again elected as an independent director given his expertise in law and mergers and acquisitions, as well as his extensive experience in related law practice and business management. The Company relies on Mr. Huang’s professional advice and supervision toward functional committees to continually improve our corporate governance.

Risk Management

Organizational Structure of Risk Management

WPG Holdings’ highest decision-making body for risk management is the Risk Management Steering Team, which is composed of the CEOs of the four major sub-groups and the CEO of WPG Holdings. Among them, the CEO of WPG Holdings is the convener of the decision-making team, and directly reports decisions to the Board of Directors.

The convener of the risk management decision-making team (the CEO of the Holdings) convenes monthly meetings with the risk management units of each group who report the results, and the CEO of the holdings proposes the guidance and decision-making of risk management plans to strengthen risk management. Consequently, WPG Holdings Risk Management Service Department, which operates independently of the business unit, integrates the risk identification, evaluation, prioritization, implementation of action plans, and risk disclosure of the risk management units of each sub-group, and debriefs with the convener of the risk management decision-making team.

WPG Holdings Risk Management Service Department regularly summarizes the risk management results and reports to the Audit Committee. Based on the suggestions guided by the Audit Committee to improve the management and adjust the action plan. The CEO of the Holdings communicates and discusses with each group at the monthly meeting. WPG Holdings Risk Management Service Department compiles the annual risk management performance and reports to the Board of Directors annually.

Risk Management Process

The risk management process of WPG Holdings includes Risk Identification, Risk Measurement, Risk Response, Monitoring and Review, as well as Report Communication and Consultation; this management structure follows the management spirit of PDCA (Plan, Do, Check, Act), and the identification of emerging risks has been integrated into the risk management.

• Risk Identication

WPG Holdings Risk Management Service Department classified the risk items into six major categories based on the materiality principle, with the details described as follows.

• Risk Evaluation

The risk evaluation is executed by the functional supervisors of WPG Holdings to conduct risk identification and evaluation, sort and identify the impact and vulnerability. Finally, the key risks are identified according to the risk score. Each corresponding unit responds to, executes, and follows up with the action plans for the key risks. The Risk Management Service Department monitors, tracks, and reports monthly.

• Risk Monitoring

Each functional unit shall monitor related risks and formulate corresponding control measures.

• Risk Response and Tracking

WPG Holdings Risk Management Service conducts monthly follow-up management of key risk response strategies and reports to the convener of the Risk Management Steering Team.

Identication of Key Risks and Risk Control Measures

Emerging Risk Management

With the increase in the number of global emerging risk types and the probability of occurrence, WPG Holdings also includes identifying and managing emerging risks in the risk management process. WPG Holdings’ identification and assessment of emerging risks in 2021 mainly focused on COVID-19 Risk Management and Conflict Minerals Risk Management.

Year 2022 Risk Management update

• Risk Management Service Unit is responsible for tracking the key risks response on a regular basis and reports to the Board of Directors once a year.
• Conduct Business Continuity Management for self-owned warehouses, Dong-guan outsourced smart warehouse, and the offices, build up the responsive plans for key risks, and to perform the practical or desk BCM drill.
• To well managed the risk of inventory, the inventory key risk indicator (KRI) management scheme is built up and in place. The risk alert data have been monitoring every month carefully.

Integrity and Ethics

The Ethics Committee is the highest-level ethics decision-making center. WPG Holdings CEO chairs the Ethics Committee, and the Ethics Working Group acts as the executive secretary. Members of the Ethics Committee include CEO of each Group and members of Ethics Working Group consist of senior executives from various functions including Human Resources, Legal, Finance & Accounting, Corporate Governance Office, Sustainability Office, and Process Efficiency Management. 

The Ethics Committee hold meetings regularly to discuss the Company’s ethics development blueprint, resolve material unethical cases, and evaluate achievements and work plans of the Ethics Working Group. The Ethics Committee reports to the Board of Directors at least once per year. The Ethics Working Group is responsible to coordinate resources and implement action plans regarding integrity, anti-corruption, anti-bribery, and compliance matters.

To implement integrity management, WPG formulated Ethical Corporate Management Best Practice Principles, Code of Ethical Conduct, Employee Code of Conduct and Company Procedures For Handling Stakeholder Suggestions and Whistle-blowing Case by Audit Committee which clearly stipulate provisions on ethical behavior, disciplinary policies and grievance procedures.

WPG Holdings Employee Code of Conduct Implementation

Continuing the 2020 staff promotion activities of "WPG Holdings Employee Code of Conduct", the Employee Code of Conduct was amended for the second time on October 7, 2021, adding Paragraph 1, Article 12, a total of 33 codes currently. In 2021, through the learning platform of WPG Holdings, the promotion video and the Employee Code of Conduct are designated as compulsory courses for new employees. The employees must complete the reading during the probationary period, to fully understand the content of the code of conduct and agree as the signature. Until May 9, 2022, a total of 171 people were completed.

Education Training of Ethical Management Principles

WPG Holdings has formulated the "Ethical Corporate Management Best Practice Principles", "Code of Ethical Conduct" and the " Corporate Governance Best Practice Principles ", which specifically regulate all employees. No matter the management level or the general employees, all must take note of the above principles and codes during the performance of their duties. We also integrate the DNA of ethical management into the daily operations through continuous education and training, internal advocacy, and auditing systems, in order to achieve stable development in corporate governance.

Regarding the topic of anti-corruption and anti-competitive behavior, with the purpose of letting the employees understand the laws and regulations to be abided by and the obligations to be performed in their duties, WPG Holdings began from the perspective of risk management, gradually planned relevant training courses, and established the internal platform to promote the information about the employees' ethical code of conduct; simultaneously implemented online courses and provided the relevant promotional materials or the course presentations on the occasions such as new staff training or monthly meetings. Therefore, the employees would acquire basic legal knowledge, such as confidentiality obligations, anti-corruption, insider trading prevention, etc. The main body covered specic codes of conduct and implementation methods. 

Information Security Governance

For the purpose of executing the diverse tasks of the information security management system effectively, WPG Holdings has formulated various information security development directions and strategies and established the "Information Security Management Committee" to manage the operation of the Company's information security management system, including the execution of the tasks of information security-related topics, formulation of procedures, review and other information security matters. Through the operation of the information security organization, the information security management system continues with a steady operation.

Information Security Execution Unit has three members. There are two regular review meetings on a monthly basis and some other none-regular meetings hold per actual requirements.

Information Security Management Mechanism

In 2021, WPG Holdings obtained the ISO27001 information security management system certification, thanks to a comprehensive management plan for the confidentiality, wholeness, and availability of the information security management system, established a complete information system for planning, execution, testing, and action. WPG Holdings formulated the information security management rules and defined the information security management indicators and management goals. As stated by the current information security management rules, the management mechanism that is executed at least once a year includes:

Information Security Incident Management Mechanism

With the aim of ensuring that the classification, reporting, handling process, statistics, and tracking of information security incidents of WPG Holdings are more systematic, the company set up an incident notication and processing mechanism, so that when an information security incident occurs, the incident can be quickly reported, dealt with, and responded in the shortest time to assure the normal operation of various businesses.

 Handling Process of Information Security Incident Reporting

In the past three years, there have been no information security-related incidents and financial impacts, and there has been no leakage of customer information due to information security incidents.

Information Security Education Training and Advocacy