Execution Principles

• Timely disclosure of material information
• Checks and balances between the board and management
• Setting the target share of independent directors on the board at a minimum of 40%
• Audit Committee was established to ensure fair and independent financial oversight
• Remuneration and Nomination Committee was established to strengthen corporate governance practices, promote a sound compensation system for directors and managers, and to select candidates for directorships
• Adoption of a high cash dividend payout policy
• Shareholders’ rights are guaranteed with the right to vote on all proposals at the annual general shareholders’ meeting or through an electronic voting system
• Strict compliance with the Code of Ethics and Ethical Corporate Management Best Practice Principles and establishment of an internal audit mechanism

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The Company’s corporate governance structure is composed of two committees: an Audit Committee and a Remuneration and Nomination Committee.

Metric for President (CEO) compensation

President’s performance and remuneration is reviewed by the Remuneration and Nomination Committee, and approved by the board meeting. Performance-based compensation of President’s annual salary is determined by a comprehensive evaluation of measurable metrics. The metrics include financial performances such as ROA、ROE、ROIC、total shareholder return, and the non-measurable external perception metrics such as customer satisfaction, DJSI evaluation results and a set of ESG indicators. The performance period for variable CEO compensation is one year and eight months (1.67years). The time vesting period for variable CEO compensation is one year and eight months (1.67years).

The shareholdings of CEO equal to 1.71 times the annual base salary. Average shareholdings of other executive committee members equal to 0.15 times their average annual base salary.

Clawback provision

We hereby explain current clawback practices on compensation of Taiwan Mobile CEO. Compensation paid to CEO comprises a fixed monthly salary and variable compensation. Variable compensation is comprised of performance-based bonuses and employee profit sharing. Variable compensation accounts for approximately 50% of the remuneration and is determined based on CEO’s contribution to the Company’s financial performance and achievements of strategic milestones, including ESG KPIs. The Company reviews the compensation mechanism periodically, taking future operating risks, environmental conservation and sustainable development into consideration.

HR is tasked with preparing and submitting an annual report on CEO’s performance and compensation considerations to the Remuneration and Nomination Committee. Based on the report, the committee will then make the final decision on CEO’s performance-based bonuses and employee profit sharing. If one or more adjustment events, including restatement of financial statements, expected or incurred losses caused by operational misconduct by CEO or through CEO’s direction, have taken place during the year, previously distributed variable compensation would be reclaimed (clawback). In addition, the Company can recover all or a portion of unvested deferred variable compensation based on risks reports issued by its risk management department.

• Articles of Incorporation

• Rules of Procedure for Board of Directors Meetings

• The Rules and Procedures of Shareholders Meeting

• Rules and Procedures of Lending and Making Endorsements

• Rules and Procedures for Acquisition or Disposal of Assets

• Procedures for Handling Material Inside Information

• Rules for Election of the Directors

• Code of Ethics

• Ethical Corporate Management Best Practice Principles

• Operation Rules of Ethical Corporate Management Best Practice Principles

• Corporate Governance Best Practice Principles

• Corporate Social Responsibility Best Practice Principles

• Rules and Procedures on Evaluating Performance of the Board

• Tax Policy

• Management Procedures for Handling Chari table Donations or Sponsorships