Excellence in Governance｜Operations and Governance

The Board of Directors (hereinafter referred to as ''the Board'') serves as the company's highest governing body. The Board carries out its relevant duties in accordance with government regulations and the company's charter, including appointing and supervising the company's management, overseeing operational performance, and preventing conflicts of interest, while exercising authority over shareholder meeting resolutions. Both directors and independent directors share responsibility for corporate governance and operational strategies, guided by principles that prioritize the interests of shareholders while also considering the interests of stakeholders, such as employees, customers, suppliers, government, and non-governmental organizations. The organizational structure beneath the Board primarily consists of four major business groups and five major centers, with various committees established to handle different functions and promote business initiatives. The chairman of the Board of Directors of the Company also serves as the CEO, leading the management team to effectively implement the Board's decisions, enhance operational efficiency, and ensure the Company's sustainable operation. The President, on the other hand, is held by a professional manager who is not a member of the Board of Directors. In response to these considerations, the number of independent director positions has been increased from the statutory three to four, as outlined in the company's Corporate Governance Best Practice Guidelines, to maintain objectivity and oversight. The primary goals are to enhance the operational performance of the group, increase shareholder interests, and achieve sustainable business operations while avoiding and mitigating related conflicts of interest.

Nuvoton is currently led by Ms. Hsiu-Fen Lai, Vice President of the Company's Finance Center, as the Corporate Governance Director. With over 27 years of financial professional experience and qualifications meeting legal requirements, she assists the Board of Directors and individual directors in fulfilling their duties. This includes arranging Board meeting schedules and agendas, planning director training, providing information during and outside of Board meetings, and regularly informing directors of relevant information. The Corporate Governance Director ensures the proper functioning of the Board of Directors and governance-related matters.

Member diversity of the 8th term Board of Directors

Board of Directors Remuneration and Performance Evaluation

The Remuneration Committee is responsible for establishing and reviewing the performance evaluation and remuneration policies, systems, standards, structures, and individual remuneration of directors and managers. It sets forth the "Measures for the Compensation and Performance Evaluation of Directors / Managers" to ensure that overall remuneration is competitive and enhances operational performance to achieve maximum long-term benefits. The remuneration of the company's managers is handled in accordance with the company's charter and the "Measures for the Compensation and Performance Evaluation of Directors / Managers," which covers salary, bonuses, and employee compensation systems and standards. In addition to considering role responsibilities, contributions to the company's operations, and benchmarking against industry standards, operational performance, profitability, management effectiveness, and the practice of core corporate values and sustainable development goals (including environmental, social, and corporate governance aspects) are also taken into account as reference indicators for manager performance evaluations and remuneration allocation. After individual reviews and assessments by the Remuneration Committee, the overall reasonableness of compensation is submitted to the Board of Directors for resolution. This includes monthly salary disbursements, performance bonuses based on operational performance, and employee remuneration based on annual profit conditions. There are no provisions regarding manager "signing bonuses or recruitment incentives and claw back mechanisms." For senior executives' retirement benefits, the "Regulations on Manager Retirement" are established to ensure retirement security for senior executives.

To implement corporate governance and enhance the functionality of the Board of Directors, Nuvoton has established the "Measures for the Compensation and Performance Evaluation of Directors" to strengthen performance evaluations, while conducting annual performance evaluations of the Board of Directors based on five aspects: the degree of participation in company operations, improvement in decision-making processes, composition and structure of the Board of Directors, selection process for directors and continuous education, and internal controls. The results of the evaluation are summarized by the Board of Directors' deliberative unit, reported to the Remuneration Committee and the Board of Directors, and used to formulate the plan to improve performance for next year. This continuous enhancement aims to improve the company's governance and increase long-term shareholder value. The Board of Directors and functional committees' performance evaluations for 2024 have been completed, and the overall results indicate that "the Board of Directors and its functional committees operate well." Additionally, Nuvoton stipulates that the Board of Directors' performance evaluation must be conducted by an external independent organization at least every three years. This includes on-site interviews with the chairman, president, conveners of functional committees, corporate governance executives, and internal audit executives, with the evaluation results reported to the Board of Directors. In 2023, the company commissioned an external organization, Taiwan Corporate Governance Association, to conduct a performance evaluation of the Board of Directors.

Board of Directors Professional Development

Nuvoton arranges annual training courses for directors on economic, environmental, and social issues related to operations to enhance their capabilities. Additionally, to facilitate ongoing learning, the company periodically sends information on economic, environmental, and social issues related to the Board of Directors. The training hours for courses related to environmental sustainability (carbon rights, climate change, sustainable finance) amount to 22.5 hours, those for courses related to corporate governance and risk management total 31.5 hours, and those for courses related to economics (regional economics, global political and economic situations) total 21 hours.

Environmental sustainability courses

22.5

hours

Carbon rights, climate change, sustainable finance

Corporate governance courses

31.5

hours

Related to corporate governance and risk management

Economics courses

21

hours

Regional economics, global political and economic situations

Functional Committees

To strengthen the supervisory function, enhance management capabilities, and improve the corporate governance structure, Nuvoton has established the four committees of Remuneration, Audit, Risk Management and Senior Executive Development under the Board of Directors, based on their respective powers and functions. and Risk Management under the Board of Directors, based on their respective powers and functions. The functional committees are composed of or involve independent directors, ensuring that the decisions and recommendations of the committees are objective and impartial. This effectively implements an independent oversight and balance mechanism, ensuring that all board resolutions and actions are properly executed. All proposals from the committees are reported to and discussed by the Board of Directors. In cases where there is a conflict of interest involving directors or their representing entities, they must abstain from the discussion. Some proposals are also reported to and discussed at the shareholders’ meeting, in line with the best interests of stakeholders.