Category: Governance

Cornerstone of Business Operation and Road to Excellence

Wonderful every WT – WT Microelectronics’30th anniversary

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One Step Further Towards Global Presence with Future

WT Group announced in September 2023 that it had signed a formal agreement to amalgamate Canadian Future Electronics Inc. in all cash at an enterprise value of US$3.8 billion. The amalgamation of the two highly complementary companies in terms of product types, customer portfolio, global presence, and logistics center layouts is expected to create long-term and sustainable growth value for all stakeholders, including customers, suppliers, employees and shareholders.

 

WT and Future will jointly shape a world-class leading electronic components distributor with its dual headquarters in Taipei and Montreal. This amalgamation will create long-term and sustainable value for all stakeholders, and marks a significant milestone for WT’s journey towards a world-class enterprise.

Innovative design for the exclusive 30th anniversary logo

The exclusive logo, with the W in the classic logo turned into number 3, symbolizes an imagined flying bird. The circuit board shading and highlights on the bird’s body represent a profound industrial significance and great expectations, that it will fly high and far around the world for a prosperous future.

The logo has a blue and green color scheme, with blue representing honesty, trust, and professionalism, and green representing rebirth, hope, and growth. The two colors are also colors with a sense of technology. The blue-green gradient symbolizes the company’s constant growth and evolution on a steady and solid foundation.

 

Naming contest for WT’s 30th anniversary special exhibition

The sense of involvement makes a successful event. “Every Wonderful Chapter WT Wrote” was selected from 308 submissions, for the name faithfully describes the journey in WT’s first 30 years. Indeed, every chapter of the story, be it a struggle, joy or surprise, is wonderful.

“Every Wonderful Chapter WT Wrote” WT Microelectronics’30th anniversary

In order to further unite the employees and build a solid foundation for sustainable development in the future, a series of events were organized to help our people to know ourselves better. In particular, a 30th anniversary gala was held at the end of the year, and a special exhibition in the offices. The exhibition of precious materials relating to the group’s history, core values, and vision, was like a time machine, taking the visitors back to 1993. An interactive well-wishes was also put up, and the special exhibition features a quiz and lucky draw activity. The quiz offered prizes including WT limited edition OMAR whiskey gift sets, tickets and vouchers for well-known art and cultural exhibitions.

WT Microelectronics’30th anniversary gifts for employees

The employees have been playing the most significant role in moving the company forward. As a token of appreciation, a portable tea cup sets set along with a fashionable and comfortable Polo shirt were given to every employee. In addition, the portable tea cup gift box also provides engraving services for employees with more than 15 years of service to express our gratitude to our employees.

Committed to ethical standards and a transparent and responsible corporate culture

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Integrity is WT’s most important core value and business philosophy. The Group’s executives and employees must abide by clear moral standards and code of conduct, and do their utmost to fulfill WT’s commitments to shareholders, banks, customers, employees, vendors and other suppliers. It is also the core requirement for WT to gain competitive advantage and act correctly.

In 2020, WT formulated the Social Policies and Code of Conduct, United Nations Anti-Corruption Policies, and United Nations Sustainable Development Goals Policies. In 2023, it released Anti-corruption, Anti-bribery and Anti-money laundering Policies, and revised the Ethical Corporate Management Best Practice Principles in line with global corporate governance and anticorruption
concepts and frameworks. The social policies and codes of conduct apply to the Board members, the Group’s employees, independent contractors, suppliers, and all those who do business with WT.

The Ethical Corporate Management Best Practice Principles, Procedures for Ethical Management and Guidelines for Conduct, Codes of Ethical Conduct, and Supplier Code of Conduct that the Board has adopted are available in either the Corporate Governance section or Sustainability Report section of the Company’s official website and the Intranet in Traditional Chinese, Simplified Chinese and English. Information on Ethical Values and Professional Code of Conduct and Insider Trading Prevention Education and Advocacy are made available on the Intranet for all employees’ reference. In addition, relevant personnel are also appointed to participate in lectures and symposiums held by industrial associations or professional groups, so as to strengthen the Group’s ethical operation policies.

 

LINK：

Major Policies

UNCAC Anti-corruption Policy

WT SDGs Policy

Social Policy and Code of Conduct

 

Regular refresher training on Code of Conduct to raise integrity awareness among all employees

An annual refresher training is given to all employees of the Group to ensure they are aware of applicable rules and regulations. In 2023, a total of 2,566note in-service employees were required to receive refresher training and 224 new hires to receive on-board training on Ethical Values and Code of Conduct. All of them have completed the course and passed the test (100% pass rate), with an accumulated attendance of ethical management training reaching 1,486.5 hours.

 

Note: After the merger with Excelpoint in 2022, the management systems are set to be integrated in phases, and the ethical management training is scheduled to be integrated in 2024.

 

WT conducts annual ethical management training for its employees, including full-time staff, contract workers, and subcontractor personnel. In 2023, the training covered 2,790 full-time staff members (accounting for 99.47%) and 15 subcontractor personnel (accounting for 0.53%). As of December 31, 2023, there were no contract workers in the company, resulting in no training participation from this category.

Implementing Ethical Business Practices and Strengthening Risk Management

To enhance the management of ethical business practices, “Ethical Management Team” has been established, comprising representatives from Human Resources, Legal, and Audit departments. The Chief Human Resources Officer (CHRO) serves as the highest authority within the team. Each business unit is responsible for the formulation, execution, and oversight of ethical business policies, management measures, and reporting procedures in accordance with their respective roles, ensuring the effective implementation of the Code of Ethical Conduct.

 

Ethical Business Practices and Anti-Corruption Management

Integrity is one of the core values of WT. We have established robust mechanisms for ethical business practices and anti-corruption management, which are implemented through the following actions:

Implementation Measures:

1.The Ethical Management Team conducts annual training sessions for all employees, including new hires, to promote awareness of ethical business practices and anti-corruption policies and regulations.

2.Operational units regularly monitor and review anomalies, such as conducting periodic supplier account verifications and visits, monitoring illicit transactions, investigating shell companies, detecting unusual payments, and identifying abnormal changes in logistics and delivery locations.

3.High-risk operations are prioritized as key audit items in the annual audit plan.

4.The CHRO reports the execution results to the Board of Directors on an annual basis.

 

WT has established stringent control mechanisms for business activities and operational procedures that are potentially prone to unethical behavior. In addition to regular monitoring and review of processes with higher corruption risks to prevent improper benefits, bribery, or other unethical conduct, internal auditors prioritize high-risk operations in the annual audit plan based on risk assessments. This approach aims to reduce the likelihood of unethical and corrupt practices. Furthermore, all departments and subsidiaries conduct annual self-assessments of their internal control systems to ensure the effectiveness of their design and implementation.

 

The Ethical Management Team reports the results of the previous year’s ethical management implementation to the Board every year. At the Board meeting on January 31, 2024, training on Ethical Values and Code of Conduct, status of professional ethical violation reports, and prevention of insider trading were reported to assist the Board in evaluating whether the ethical management prevention measures established by the Company are operating effectively.

No involvement in political-related initiatives and no political donations

WT has not made any direct or indirect donations to political activities, political parties/associations/NGOs, politically related organizations, individual politicians, or other voting/referendum initiatives in the past five years. The amount of political donations has been NT$0. In addition, WT has not lobbied on specific issues or conducted related activities with interest representative groups.

Compliance with laws and regulations

WT strictly abides by all applicable laws and regulations at each operating location. As of the end of 2023, the Taiwan headquarters was fined NT$50,000 in accordance with Article 24 of the Labor Standards Act after a labor inspection discovered failure to timely complete the handling of an overtime application. Subsequently, the management was reminded to fulfill their management obligations and care for employees at all levels. The working hours management
and overtime tracking mechanisms were strengthened, attention is paid to employees’ labor rights and physical and mental health protection. No violation of laws or regulations were found in economic aspect (investment, securities, taxation, etc.), environmental aspect (air pollution, wastewater, waste, etc.), or social aspect (human rights, disabilities, injuries, etc.) in any operating sites, and thus no resulting penalties from the competent authorities.

 

Whistle-blower ID and the investigation process are kept highly confidential

WT has a whistle-blowing system specified by the provisions of Article 23 of the Ethical Corporate Management Best Practice Principles and Article 21 of the Procedures for Ethical Management and Guidelines for Conduct. Anyone who suspects or discovers a violation should take the initiative to report it to Independent Directors, supervisors, internal audit supervisor or other appropriate person.

WT’s whistleblower channels include an internal whistleblower mailbox and a whistleblower section on the official website for whistleblowers to report illegal conduct of company personnel. The Auditing Office is responsible for accepting external reports, forwarding them to the heads of relevant units for investigation, and following them up until the cases are closed. The identity of the whistleblower, the content of the report, and the investigation process are all kept confidential. A complete record of the case acceptance, investigation process, and results is kept for five years. In addition, an independent hotline, dedicated mailbox, and special handling procedures have been set up for sexual harassment complaints in order to protect the privacy of the complainant. A serious breach of integrity is subject to removal or dismissal in accordance with relevant laws or management regulations, depending on the circumstances of the case.

 

Reporting Channels

Mail to “14F.,No.738, Zhongzheng Rd.,Zhonghe Dist., New Taipei City 235603 , Taiwan (R.O.C.)”

WT Website：”Report Ethical Violation in the Workplace“

Receiving Unit

Auditing Office

Protecting corporate assets with enhanced overall supply chain information security

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In order to ensure the confidentiality, integrity and availability of WT’s information assets, to comply with the requirements of relevant laws and regulations, to protect them from internal and external deliberate or accidental threats, and to meet business needs, information security policies have been formulated as a basis for compliance to effectively and reasonably mitigate operational risks. The policies are applicable to WT and its affiliates, subsidiaries that are 100% directly or indirectly owned, controlled by WT, subsidiaries that sell or provide services for the Group, all personnel of the mentioned organizations, outsourcing service providers, student workers, and visitors, etc. In addition, information security clauses have been added to external contracts.

According to the 2023 World Economic Forum (WEF) Global Risk Report, “Widespread cybercrime and cyber insecurity” is ranked as the 8th risk within 2 years and 10 years. With increasingly complex cyber espionage or cyber crimes, such as loss of privacy, data fraud or data theft, compromised information security protection may lead to data leakage and blackmail risks, and even core system disruptions, causing serious business losses and damaged goodwill.

In view of the growing importance of information security and increasingly rampant cyber attacks, WT’s Information Security Department is headed by Chief Information Security Officer at the level of deputy general manage. The Department, composed of one dedicated director and two dedicated personnel, is responsible for information security risk management, incident investigation, system vulnerabilities disclosure, and information security system evaluation and introduction, etc. Following the establishment of the Sustainable Development Committee, information security management strategies and results will also be presented to the Sustainability Development Committee before being submitted to the Board. There were no major information security incidents involving sensitive information leakage or information service disruption in 2023, and no financial losses were caused to customers or suppliers due to the information security incidents.

Information security certificates are used as a mechanism to check and continuously improve information security professional capabilities. In 2023, a total of six international certificates in information security governance, information security management and auditing were obtained, including CEH Master, CISA, and ISO 27001 Lead Auditor. In addition, WT has joined joint information security defense organizations such as Taiwan CERT/CSIRT Alliance and Taiwan Chief Information Security Officer Alliance to strengthen the joint information security defense system by identifying relevant information security trends and sharing threat intelligence. At a meeting of the Taiwan Chief Information Security Officer Alliance in 2023, WT shared its supply chain security practices, explaining how to help vendors improve their information security capabilities and strengthen overall supply chain security protection.

Regular refresher training to raise employee safety awareness

While conventional information security protection boundaries are no longer effective, employee security awareness has become an important part of information security management. From 2021, randomly selected phishing templates are sent out every month for social engineering exercises. For employees who click on phishing emails, there is a system in place to require refresher training, notify their direct supervisors, and keep track of the training results, in order to reduce information security threats caused by employees lacking information security awareness.

 

Implementing information security management system to upgrade corporate information security resilience

Based on ISO 27001 and NIST CSF, WT introduced and strengthened its security control measures, constantly evaluates its information security protection mechanism from point, line and plane, and develops different technical combinations. It also adopts defense-in-depth approach and security-by-design principles to further strengthen multi-layer security in eight aspects, which are management, data, endpoint, application, network, third-party supply, business continuity and emergency response, intelligence integration and joint defense, so as to reduce impact of information security risks to acceptable levels and continuously monitor residual risks. In addition, ISO 27001 verification and red team exercises were performed by third-party institutes to verify the effectiveness of management mechanisms and system security protection, and strengthen information security resilience. WT is ISO/IEC 27001:2013 and CNS 27001:2014 verified via TCIC, with certificates valid until 2025. The information security measures it took in 2023 with regard to the five NIST CSF core functions were as follows:

Five major measures to improve information security control and network protection

WT adopts defense-in-depth approach, security-by-design principles, and continuous threat exposure management (CTEM) concept to identify assets that are vulnerable to attack paths. WT manages risks to reduce the probability and impact of threats. Its information security control measures in 2023 include :

Response to customers’ information security concerns

WT relies heavily on information systems and online transactions to conduct business with its upstream and downstream partners. WT regularly returns information security self-assessment questionnaires to customers and vendors, and communicates with them on specific information security issues from time to time. In addition, to meet customer requirements, a third-party information security service provider is commissioned by a customer to perform host vulnerability scanning and penetration testing to ensure supply chain information security.

Business continuity and emergency response

24/7 information security monitoring

WT has a dedicated information security mailbox to receive information security notifications from external sources to inform internal security improvement.

Regular information security incident exercises to ensure recovery in the shortest possible time

To enhance corporate resilience and maintain high availability of the information system, tests and exercises are conducted at least once a year according to the business continuity plan of the information security management system. The exercise involves a simulated incident in the main system, switch of the main data center operation to offsite, detailed record of the exercise and results, and subsequent review and follow-up of continuous improvement.

In 2023, the number of unexpected power outages decreased by 25% relative to 2022. Nevertheless, WT continued to conduct a power supply abnormality exercise to ensure that emergency generators can be activated immediately and normal operation of the facilities and systems can be maintained. The exercise proved that the emergency response procedures were appropriate and all the facilities and systems were in normal operation.

Setting up information security notification system for hierarchical management and rapid response

WT has security incident management procedures in place, which classify information security incidents into four levels and specify notification procedures accordingly. The individual who spots an information security incident reports it to IT or information security personnel who then determines whether it is an incident and its level before forwarding accordingly. A critical incident will be immediately reported to the Chief Information Security Officer, who will pass it on to the General Manager for emergency response.

The information department must remove and resolve information security incidents within the target time, and conduct reviews and improvement measures after the incident is concluded to prevent its recurrence. If the assessment of the incident cause and impact find that the incident was caused by an employee’s behavior, he or she will be punished in acordance with the work rules.

 

A total of four information security incidents occurred in 2023, all of which were non-critical. Three of them involved leaked passwords, which were all responded to and handled immediately and caused no impact; and the other involved an external network anomaly experienced by WT’s network service provider, and the traffic was instantly redirected to the backup route. No core services, confidential or sensitive data, or confidential information related to transactions with customers or vendors were leaked in these incidents.

 

Combining sustainable development with risk management to strengthen sustainable operations

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In 2023, WT set up the Sustainable Development Committee to combine sustainable development management capabilities and coordinate corporate risk management. The Committee comprises two functional groups, Sustainable Development Team and Risk Management Team, and takes the operating mechanism over from the Risk Management Committee that it replaced. The Committee is currently made of five members: the Chairman, one Director and three Independent Directors. The Risk Management Committee had one meeting in 2023 before presenting the risk management operation status to the Board. Starting from 2024, the Sustainable Development Committee will also meet regularly every year and report the risk management operation status to the Board. The Committee may also meet whenever necessary. Each of its functional groups is responsible for the actual implementation of risk analysis, improvement and tracking.

The Risk Management Team is designated to implement risk management. It is mainly responsible for executing overall risk management within WT, formulating risk management policies, structures and mechanisms, establishing qualitative and quantitative management standards, and reporting the risk management implementation status and results to the Sustainable Development Committee.

 

 

 

Complying with international tax standards and publicly disclose tax information

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Taxes are not only a cornerstone of national governments’ provision of local infrastructure and public services, but also an important source of funding to attain global sustainable development goals. To meet changes in global tax environment, increasing complexity in cross-border transactions and global anti-avoidance trends, WT continues to interact and cooperate with tax authorities in countries where it operates.

Facing the trend of international tax equity, WT implements corporate governance and shapes a corporate tax culture by formulating tax governance and transfer pricing policies, while taking into account the overall operational development and the creation of operating profits. The policies are reviewed annually to reflect international tax trends, and the need for revisions evaluated. WT files honestly in accordance with the regulations of each location where it operates, and make proper use of applicable government tax incentives.

In preparations for the upcoming Controlled Foreign Corporation (CFC) system, WT has adjusted its organizational structure to comply with the international anti-avoidance trend for tax fairness, reorganized its substantive operating affiliates registered in countries with low tax burdens, and prudently assessed the impact of the taxation policy on the Group. It also keeps close watch on any legislative news.

Tax irregularities or unethical matters can be reported internally and externally through WT’s exiting whistleblower mechanism. All tax information disclosed in relevant public channels, such as annual reports at the shareholders’ meeting, is derived from financial statements certified by an accounting firm.

 

Tax payment situation

WT’s effective income tax rate and cash income tax rate are both higher than Taiwan’s statutory income tax rate of 20% for profit-making enterprises, mainly because the Company’s management retains part of the current year’s earnings
without distributing in consideration of the working capital required for the Group’s future operational growth, and is
required thus to pay tax for the undistributed earnings. The increase in the cash effective tax rate in 2023 is mainly due
to the difference in income tax payment time and the increase in profits in 2022 relative to 2021.

 

Improving operational efficiency and delivering low-carbon services

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Increasing digital transactions and information exchange year by year

With more than 10,000 customers and vendors, WT has introduced an operating model featuring electronic transactions and data exchange to significantly improve employee’s efficiency with digital sales and procurement procedures and with mutually agreed electronic exchange protocols that allow data interfacing. The following table shows the numbers of e-transactions with customers and vendors and their shares in revenue or purchase amounts in the past three years.

 

Digital transformation of operation and management procedures

Digitizing supply chain management

The complete establishment of a well-structured enterprise database, which was the Phase I goal of digital transformation, was followed by work on the supply chain operations such as procurement, stock and inventory management, customer order and shipment management in 2022. A trial run of some operation procedures and report management began in Q4 2022, and the optimized procedures have been gradually introduced in 2023 to improve processes such as procurement, shipment date reply, customer PO management, and paperless value-added tax invoicing.

Optimized processes and improved efficiency

Visual procurement decisions greatly improved work efficiency

In 2023, a centralized procurement platform was created to provide a one-page view of the necessary information for procurement decision-making, so that the dedicated sales and procurement personnel and procurement approval supervisors can quickly determine and proceed with procurement-related procedures and approval, and reduce inventory risks. Electronic procedures for shipment date change request and order cancellation request were also introduced.

Customized reports are generated with software assistance to simplify operations and enhance management work

Supply chain management are increasingly performed on the system. In addition, a customized automation-assisted module using Excel VBA tools to export customized reports was introduced to improve employees’ work efficiency and value by facilitating some time-consuming and labor-intensive tasks that require manual processing or customized reports.

Business dashboard for a quick grasp of practical work information

At WT, business dashboards are customized for users in different roles at different levels to meet their functional and decision-making requirements. Operational data automatically collected, sorted, and compiled on a daily basis by the system are made conveniently accessible via mobile devices or the Intranet to appropriate executives and employees, so that they are kept well-informed of the up-to-date operation status and trends and thus able to respond to and take action on any anomaly at the earliest possible moment.

Providing customers with comprehensive services

WT’s sales representatives regularly communicate with customers about sales orders, shipment dates and other transactions related matters. There is also a customer complaint mechanism in place for customers to provide feedback about service quality, product shipment quality, or other abnormal events.In order to ensure the overall customer service quality, a plan to set up customer satisfaction survey system has been launched in 2023. Opinions will be collected through questionnaires from important customers and new customers in 2024 as a basis for WT to continuously improve its service quality. The survey will be divided into five major aspects to understand the satisfaction level of each aspect. In addition, the input from customers will be gathered, and an improvement solution for each problem formulated and followed to ensure service quality.WT has already a customer complaint procedure in place to collect customer feedback about products and services. The complaints are filed to the competent units to analyze the cause, and keep track of improvements. Not only a reply will be given to customers about how the complaint is eventually handled, but internal publicity or training will be strengthened to prevent similar incidents from recurrence.

 

 

Continued growth in 2023! 4% increase in the Group’s operating revenue

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WT’s consolidated net operating revenue was NT$594.5 billion in 2023, an increase of NT$23.3 billion or by 4%, from 2022. The net profit was NT$4 billion in 2023 and EPS was about NT$4.24 based on weighted average outstanding shares.

Optimistic outlook for long-term semiconductor market demand

2023 was a challenging year for the global semiconductor industry. The weak overall global economic environment, high inflation and high interest rates have intensified and extended the global semiconductor inventory adjustment cycle. Despite the challenges posed by the macro environment, the Company has demonstrated strong resilience. Facing the uncertainty of global economic recovery in the post-pandemic era, the rapid development of AI technology, the changes in the electronic product supply chain, and the increasing demand for energy conservation and carbon reduction brought about by climate change, the market demand and growth potential is expected to remain strong for the semiconductor sector in the long term. WT will continue to focus on high-growth products and applications such as third-generation semiconductors, electric vehicles, industrial control, energy management, green energy, cloud data centers, 5G communications, etc, as the rapid development of these application fields requires the supply of semiconductor components. To strengthen the foundation for sustainable business operations, WT will continuously improve its operational efficiency by optimizing the operation management system, enhancing its risk management, reinforcing its financial control system, upgrading its human resource management, and strengthening its ability to provide added values in the electronic components industry chain.

Continuously providing the best services to help customers achieve forwardlooking and sustainable product design

The industries and activities covered by Taiwan Sustainable Taxonomy activities are important global trends towards sustainable development. WT systematically manages the application fields of products it sells to consistently provide optimal services to meet its customers’ needs and assist them in developing forward-looking sustainable product designs.

WT has conducted an analysis to identify existing products that are in line with forward-looking economic activities specified by the Reference Guidelines for the Identification of sustainable economic activities in Taiwan Sustainable Taxonomy by the Financial Supervisory Commission. They are applications related to low-carbon transportation technology, high-efficiency equipment manufacturing and high-efficiency technology-related applications, and renewable energy installation. WT will continue to invest resources in these application fields to meet the goal of 20 percent operating revenue contribution from forward-looking economic activities by 2030.

 

Reinforce Corporate Governance

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The Board of Directors is WT’s highest governance body. The Board of Directors are mainly responsible for monitoring the achievement of the Company’s operational goals and performance, providing strategic guidance to the management team, and overseeing the Company’s compliance with laws and regulations to ensure the best interests of its shareholders. In order to optimize the quality of the Board’ decisionmaking, there are a number of functional committees with different competence under the Board to effectively review the Company’s decisions on important issues and supervise their implementation.

In addition to the Corporate Governance Best Practice Principles, WT has a diversity policy to meet the needs of the Board’s operational and developmental functions, while taking into account the Directors’ professional knowledge and skills. Directors are elected at the shareholders’ meeting in accordance with the Rules for Directors Election. There were three functional committees under the Board: Audit Committee, Remuneration Committee and Risk Management Committee. In order to optimize and improve the Board’s functions and strengthen the management mechanism, WT began appointing a corporate governance supervisor in 2019 to handle matters relating to the Board meetings and shareholder meetings, assist the Directors in their orientation, continuing training, duty performing, and compliance with laws and regulations. For details, see Implementation of Corporate Governance in 2023.

 

Independent directors making up half of the Board Enhance the Independence of the Board of Directors

The Company’s Chairman concurrently serve as President to improve operational efficiency and the execution of decisions. In 2023, an additional Independent Director was by-elected as the eighth member of the Board by the annual shareholders meeting to strengthen the Board’s supervisory function. For the implementation of the Board Member diversity policy, see the Corporate Governance section (Organization and Responsibilities of the Board of Directors) of the WT official website. The Board of Directors meets at least once a quarter. In 2023, the Directors’ in person attendance rate at the 15 Board meetings was 94% , and the Independent Directors’ was 100%. Items falling into the nine types of matters specified in the Rules of Procedure for Board of Directors’ Meetings were submitted to the Board for discussion, including operating plans, financial reports, internal controls, chairman selection, fundraising, issuance of securities with equity nature, and other matters required by laws and regulations. A total of 55 major resolution were adopted in 2023. See Major Resolutions of Board Meetings under the Corporate Governance section for details.

 

To reduce the possibility of conflicts of interest between the Chairman and the other Directors, WT discloses information including the content of the items, the names of the interested Directors, and reasons for recusals in the annual reports, as required by Article 15 of the Rules of Procedure for Board of Directors’ Meetings. In addition, in compliance with the requirements of Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board’s Exercise of Powers, at least half of the Board Members are Independent Directors, and more than half of them are neither employees nor executives. Every year, WT arranges for each Director to attend professional director courses provided by external organizations such as Taiwan’s Securities and Futures Institute to improve the Board’s operational effectiveness. To implement corporate governance, Independent Directors may provide input and make suggestions in each functional committee for the Board’s information. In addition, information such as the existence of controlling shareholders and related party transactions is disclosed in the annual reports.

For detailed information on the members of the Board, the Audit Committee and other functional committees in 2023, including their age range, experience, tenure, concurrent positions in other companies, as well as relevant information on their Board meeting attendance rate, continuing education status, and recusals record, see Chapter 3: Corporate Governance Report of WT’s 2023 Annual Report for the description of implementation status of recusals of Directors.

 

Audit Committee members are hands-on with 100% attendance

The Audit Committee is composed of all Independent Directors. With one Independent Director byelected in 2023, there are currently four Committee members, with Kung-wha DING serving as the convener and chairman. The Committee meets at least once every quarter. The accountant must communicate fully with the Independent Directors on audit planning, audit, and audit results. The Internal Auditing Officer presents the implementation status and other matters to the Audit Committee at every non-emergency meeting. In 2023, a total of fourteen Audit Committee meetings were held with all members having a 100 percent in-person attendance rate. For detailed information, see the Operation of the Audit Committee in 2023.

Improved executive compensation management system Establish the Regulations Governing the Share Ownership of the CEO and Non-Executive Directors

The Remuneration Committee is composed of three Independent Directors. The purpose of the Committee is to take into account the Company’s operational performance, make objective and professional recommendations to the Board, and assist the Board in implementing and evaluating the Company’s overall compensation and welfare policies. In addition, the remuneration of directors and executives is determined and reviewed in accordance with the Director and Functional Committee Remuneration Payment Guidelines and the Regulations Governing Compensation Payment of Executive Officers as necessary to strike a balance between sustainable management and risk control. In 2023, a total of four Remuneration Committee meetings were held with all members having a 100 percent in-person attendance rate. For detailed information, see the Operation of the Remuneration Committee in 2023.

 

The Regulations Governing the Share Ownership of the CEO and Non-Executive Directors in 2023 to encourage the CEO and non-executive Directors (excluding Independent Directors) to hold an appropriate amount of the Company’s stocks for a long period, so that their performance could be consistent with shareholders’ interests and they could share the Company’s operating results with shareholders.

In 2023, the General Manager’s total annual pay (NT$23,400,000) was 19.8 times of the median
(NT$1,180,574) of that of the employees (excluding the General Manager) who have worked for more than six months in 2023 at the Taiwan headquarters and the four subsidiaries including Morrihan, Nuvision Technology, Maxtek Technology, and Techmosa. The General Manager’s pay increase from 2022 to 2023 was -71.6 times of the employees’ median pay increase at the Taiwan headquarters including the four mentioned subsidiaries. The ratio was negative as there was a negative increase in the General Manager’s total pay during the period. The total pay included the basic monthly salary and variable bonus and excluded the stock ownership trusts. Only the employees who have been employed throughout both 2022 and 2023 were taken into account for the median calculation to prevent discrepancies between the statistical median and the actual situation caused by issues such as incomparability of the pay increase of those who have not received a full year’s remuneration in both years (including new hires in 2022 or departures in 2023), and the absence of remuneration increase data for the new hires in 2023.

 

 

 

Two new committees, both with more than half of the members being Independent Directors

The Sustainable Development Committee was established in November 2023 to supervise and manage the implementation of sustainable development. At least three of the Committee members shall be appointed by the Board, and more than half must be Independent Directors. The Committee currently has five members. They are the Chairman, one Director and three Independent Directors. Its first convener and chair is Director Kerry Hsu. There are two functional groups under this Committee: Sustainable Development Team, headed by Chief Sustainability Officer Willie Sun, and Risk Management Team, headed by Chief Financial Officer Cheryl Yang.

The Nominating Committee was established in November 2023 to assist the Board in developing and managing human resource strategies for Directors and senior executives through fair and transparent procedures. At least three of the Committee members shall be appointed by the Board, and more than half must be Independent Directors. The Committee currently has three members. They are the Chairman and two Independent Directors. Its first convener and chair is Chairman Eric Cheng.

Board and functional committee performance assessment

WT has formulated the Rules for Board of Directors Performance Assessments in 2016, which clearly stipulates that the Board shall be evaluated at least once a year, and its performance must also be assessed once every three years by an external professional independent institution or an external team of experts and scholars. The assessment results must be reported to the Board, and be used as a reference to determine individual directors’ remuneration payment and nomination for the Board re-election.

In 2023, Taiwan Institute of Ethical Business, an external professional institute, was commissioned to assess the Board’s performance. The Institute and its executive experts have no business dealings with WT and thus are independent. The assessment was conducted through document review, questionnaires and on-site interviews with the Directors in four major aspects. The assessment concludes with two specific recommendations: 1) Increase the Independent Directors’ understanding of the operations of overseas subsidiaries and deepen their interaction with the executives; 2) Continue to implement the Company’s sustainable management goals. The internal and external assessment results were discussed at the Board meeting on February 16, 2024, which agreed to optimize WT’s corporate governance implementation by making the recommended improvement. For detailed information, see The implementation of external board performance evaluations.

 

 

 

Rigorous internal auditing to ensure integrity and objectivity

In WT, the Internal Audit Department is an independent unit under the Board. The appointment and dismissal of the Company’s internal audit supervisor are approved by the Audit Committee and passed by the Board. The appointment, dismissal, evaluation, review, salary, and compensation of internal auditors are handled in accordance with the Corporate Governance Best Practice Principles, and shall be submitted by the internal audit supervisor to the Board Chairperson for approval. The internal auditors are evaluated and reviewed once a year.

The purposes of internal audits are to assist the Board and executives in inspecting and reviewing defects in the internal control systems and measuring operational effectiveness and efficiency, to make timely recommendations for improvements to ensure the sustained operating effectiveness of the systems, and to provide a basis for review and correction.

 

Self-monitoring to enhance system adaptability

Regular internal audits are performed according to the annual audit plans, which is passed by the Board and based on identified risks. Special audits may be performed on a project basis when necessary. After an audit is concluded, the audit report and followup report are submitted for review to the Audit Committee before the prescribed statutory dates. The audit supervisor shall attend regular Audit Committee and Board meetings to report on the status and results of audit execution.

All internal departments and subsidiaries are to conduct self-assessments once a year and implement the Company’s self-monitoring mechanism. The design and implementation of the internal control system are adjusted in a timely manner in response to changes in the environment. The self-assessment reports are reviewed and approved by internal auditors, and the self-assessment results and audit discoveries provide a basis for the Board and General Manager to produce Internal Control System Statements.

WT has established an internal control system related to the management of financial and non-financial information in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies, and has incorporated the preparation of sustainability reports into the internal control system for management. The Company’s management also exercises due diligence to ensure the quality of Sustainability Report.

 

Operational efficiency was improved toward low-carbon services

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Following the establishment of a well-structured enterprise database‭, ‬which was the Phase I goal of digital transformation‭, ‬the‭ ‬Phase II kicked off in 2022‭ ‬to introduce digital tools and technologies for a comprehensive review and analysis of supply chain‭ ‬operations such as procurement‭, ‬stock and inventory management‭, ‬customer order and shipment management‭. ‬Along with relevant digital tools and system development‭, ‬the trial run of some operation procedures and management reports started in Q4‭ ‬2022‭ ‬with the‭ ‬full introduction expected in 2023‭.‬

Introduction of RPA‭, ‬B2B/EDI and automation further enhances operation efficiency

To improve the existing manual handling with RPA and automated procedures‭. ‬A total of 100‭ ‬vendor-related operating procedures and management reports‭, ‬including price request and maintenance‭, ‬procurement operations‭, ‬project registration and maintenance‭, ‬and‭ ‬273‭ ‬customer-related operating procedures and management reports‭, ‬including order and shipping operations‭, ‬delivery management‭,‬‭ ‬and sales forecast‭, ‬have been automated to meet the customized operation requirements of different vendors and customers‭. ‬As a‭ ‬result‭, ‬the working time of relevant personnel was greatly reduced‭, ‬and the feedback turnaround time and service quality were effectively improved‭ .‬

Improved Business Dashboard Information

At WT‭, ‬business dashboards are customized for users in different roles at different levels to meet their individual functions and decision-making requirements‭. ‬Operational data automatically collected‭, ‬sorted‭, ‬and compiled on a daily basis by the system are made conveniently accessible via mobile devices or the Intranet to appropriate executives and employees‭, ‬so that they are kept‭ ‬well-informed of the up-to-date operation status and trends and thus able to respond to and take action on any abnormality at the earliest possible moment‭.‬

Digitization achievements in procurement, stock and inventory management procedures

Digitization achievements in customer ordering and freight management procedures

WT’s Tax Policy’

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Taxes are not only a cornerstone of national governments‭’ ‬provision of local infrastructure and public services‭, ‬but also an important source of funding to attain global sustainable development goals‭. ‬In response to changes in global tax environment‭, ‬increasingly complex cross-border transactions and global anti-avoidance trends‭, ‬we continue to interact and cooperate with tax authorities in countries where we operate‭.‬

 

Under the trend of international tax equity‭, ‬WT implements corporate governance and establishes a corporate tax culture through‭ ‬the formulation of tax governance policies and transfer pricing policies‭, ‬while taking into account the overall development of operations and the creation of operating profits‭. ‬We review our policies annually in accordance with international tax trends‭, ‬and evaluate the need for revisions‭. ‬We file honestly in accordance with the regulations of each location where we operate‭, ‬and make proper use of relevant government tax incentive policies‭.‬

 

In the face of the upcoming Controlled Foreign Corporation‭ (‬CFC‭) ‬system‭, ‬WT has adjusted its organizational structure to comply‭ ‬with the international anti-avoidance trend for tax fairness‭, ‬reorganized its substantive operating affiliates registered in countries with low tax burdens‭, ‬and prudently assessed the impact of the taxation policy on the Group‭. ‬We also keep close watch on‭ ‬any revision of applicable laws and regulations‭.‬

 

Tax irregularities or unethical matters can be reported internally and externally through WT’s established whistleblower mechanism‭. ‬All tax information disclosed in relevant public channels‭, ‬such as annual reports of the shareholders‭’ ‬meeting‭, ‬is derived from financial statements certified by an accounting firm‭.‬

2021‭ ‬saw a profit growth and lower cash effective tax rate‭.‬

WT’s effective income tax rate and cash effective tax rate in 2022‭ ‬were 23.32%‭ ‬and 23.97%‭ ‬respectively‭, ‬which is higher than the‭ ‬statutory income tax rate of 20%‭ ‬for profit-seeking enterprises in the Republic of China‭. ‬It was mainly because the management‭ ‬retained part of the period’s annual surplus for working capital needed for the Group’s future business growth‭, ‬and we had to pay the undistributed surplus tax‭. ‬The effective cash tax rate was lower in 2021‭ ‬mainly due to the difference in the timing of income tax payment and the substantial increase in profit in 2021‭ ‬compared to 2020‭. ‬The profit-seeking enterprise income taxes paid‭ ‬in Taiwan and China‭ (‬including Hong Kong‭), ‬WT’s main places of operation‭, ‬accounted for 97%‭ ‬of the tax we paid in 2022‭.‬

2021‭ ‬saw a profit growth and lower cash effective tax rate‭.‬

WT’s effective income tax rate and cash effective tax rate in 2022‭ ‬were 23.32%‭ ‬and 23.97%‭ ‬respectively‭, ‬which is higher than the‭ ‬statutory income tax rate of 20%‭ ‬for profit-seeking enterprises in the Republic of China‭. ‬It was mainly because the management‭ ‬retained part of the period’s annual surplus for working capital needed for the Group’s future business growth‭, ‬and we had to pay the undistributed surplus tax‭. ‬The effective cash tax rate was lower in 2021‭ ‬mainly due to the difference in the timing of income tax payment and the substantial increase in profit in 2021‭ ‬compared to 2020‭. ‬The profit-seeking enterprise income taxes paid‭ ‬in Taiwan and China‭ (‬including Hong Kong‭), ‬WT’s main places of operation‭, ‬accounted for 97%‭ ‬of the tax we paid in 2022‭.‬

 

 

Risk control and management is the first step towards sound growth and sustainable operation

For the purpose of enforcing the Company’s risk management mechanisms and strengthening corporate governance‭, ‬the Risk Management Committee was put in place in 2020‭. ‬In order to keep risks arising from operating activities within tolerance‭, ‬the risk management policies were passed on January 5‭, ‬2021‭ ‬by the Board as WT’s risk management guidelines‭, ‬which cover the purpose of management‭, ‬scope of risks‭, ‬organizational structure and responsibilities‭, ‬management procedures‭, ‬risk categories‭, ‬and evaluation of risk management operations and implementation‭. ‬

The Risk Management Committee was set up and designated for risk assessment

The Risk Management Committee is a committee of the Board of Directors and is composed of three Independent Directors‭, ‬the Chairman and the Chief Financial Officer‭. ‬One meeting at least is convened every year to report to the Board of Directors on the operation of risk management‭, ‬additional meetings may be convened at any time as needed‭. ‬Functional units are responsible for the implementation of risk analysis‭, ‬improvement and tracking activities‭.‬

 

A Risk Management Task Force of the Risk Management Committee is going to be set up in 2023‭, ‬with the General Manager as the convener‭, ‬and relevant heads of functional units assigned by the General Manager according to the risk items managed as team members‭. ‬The Risk Management Task Force will be the responsible unit for the implementation of risk management‭. ‬It is mainly responsible for the overall risk management‭, ‬including formulating risk management policies‭, ‬structures and mechanisms‭, ‬establishing qualitative and quantitative management standards‭, ‬and reporting the risk management implementation status and results to the Risk Management Committee‭.‬

Risk types and identification

Risk Management and Countermeasures

Financial risk management is important for WT’s operations‭. ‬For details of finance-related risk analysis and management policies‭, ‬please see the Annual Report 2022‭. ‬For details of information security-related and climate change-related risk analyses and management policies‭, ‬please see Sections 2-6‭ ‬and 4-2-1‭. ‬Other risks related to WT’s operations are as follows‭:‬

 

Change in government policies and legislation

Risk Factor
Our operation would be affected if there is a change in important industry policies or legislation made by government of a country where WT operates‭.‬

Current Impact on the Company
National governments tend to encourage the development of high-tech‭, ‬semiconductor‭, ‬and high-value-added logistics logistics industries‭, ‬especially Taiwan and China‭; ‬therefore‭, ‬at this stage‭, ‬there are no major changes in government policies and legislation.

Countermeasures
WT’s legal‭, ‬accounting‭, ‬and stock affairs teams keep watch on and dutifully collect important information of market and legislative changes at home and abroad‭, ‬and timely consult legal and accounting experts to propose measures in response to major changes‭ ‬in domestic and foreign policies and legislation‭.‬

Change in technologies

Risk Factor
A change in technologies or the industry will lead to changes in our production and sales and pose risks to our operations as WT‭’‬s product portfolio is mostly comprised of high-tech products‭.‬

Current Impact on the Company
There are no change in technologies or the industry that have an impact on the company’s finance or business‭.‬

Countermeasures
WT’s R&D and sales teams keep watch on potential impact of change in technologies or the industry on the Company‭. ‬In addition‭, ‬the R&D team further develops high-value-added and high-profit products to secure our source of profit with a more diverse and high-end portfolio‭.‬

Concentration of purchases or sales

Risk Factor
There would be a risk of major impact on the sales performance when the purchases or sales are concentrated and a major agency right or customer is lost‭. ‬

Current Impact on the Company
In 2020‭, ‬WT lost the agency right of a supplier who made the biggest contribution to our revenue‭, ‬and managed subsequently to make up for the lost performance by deepening partnership with other suppliers‭. ‬At present‭, ‬WT has a relatively extensive pool of‭ ‬more than 10,000‭ ‬customers and there is thus no problem of excessively concentrated purchases and sales‭.‬

Countermeasures
WT is a professional distributor of semiconductor components‭. ‬Most of our suppliers and customers are well-known domestic and foreign companies‭. ‬WT not only maintains good relations with existing customers and suppliers‭, ‬but also strives to expand customers and suppliers by actively seeking new customers and developing new agency product lines‭.‬

Emerging risks

Risk Factor
The impact of the COVID-19‭ ‬pandemic on the supply chain of IT products may accelerate the trend of supply chain transfer and decentralization‭, ‬and pose downside risks to global economic growth in the long run‭.‬

Current Impact on the Company
The COVID-19‭ ‬epidemic has accelerated global digitalization and increased the demand for high-tech products‭; ‬there is no negative impact on our finance and business‭, ‬as WT has established a cross-regional operation setup‭, ‬which is sufficient to cope with the supply chain transfer and decentralization‭.‬

Countermeasures
WT will continue to pay close attention to changes in the general environment, adapt our organization and business with flexibility, and provide robust working capital to cope with changes.