Sat, Jan 18, 2020 - Page 12 News List

Companies with losses must detail compensation

By Kao Shih-ching  /  Staff reporter

Listed companies with losses in any of the previous three years must disclose board director and supervisor compensation packages in annual reports filed in March, the Financial Supervisory Commission (FSC) said on Thursday.

Previously, only companies that were in the red in any of the previous two years were required to disclose compensation information, FSC Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) said.

Last year, the regulator tightened the rules in a bid to enhance listed companies’ corporate governance, with the amendment taking effect on Thursday, Tsai said.

The new disclosure rules also apply to listed companies whose nonmanagerial employees have an average annual wage below NT$500,000 (US$16,688) and firms among the bottom 20 percent of the corporate governance evaluation, Tsai said.

“As the regulator, we will not judge companies that pay their board members or supervisors too generously,” Tsai said. “But the disclosure will help shareholders better understand whether the companies they invest in are spending money wisely.”

Shareholders might also be concerned when the wage gap between employees and board members or supervisors is significant, she added.

Among 1,717 listed companies on the Taiwan Stock Exchange and Taipei Exchange, 824 companies are expected to reveal their payment information this year, given that they were at one time unprofitable in 2017 or 2018, Tsai said.

The number could change after companies announce their earnings results for last year, she added.

Meanwhile, listed companies that have the same person serve as chairman and general manager simultaneously would be required to state the reason and necessity for the appointment, Tsai said.

A total of 560 companies have the same person serving in the two positions, she said.

While the FSC prohibits companies in the financial sector from having the same person in these roles, companies in other industries, including biotech and technology, still have this arrangement, she added.

For example, Hon Hai Precision Industry Co (鴻海精密) founder Terry Gou (郭台銘) served as the company’s chairman and president, and now Young Liu (劉揚偉) serves in the two roles, Taiwan Stock Exchange data showed.

A company with spouses or a parent and child for chairman and president would also need to explain the appointments, Tsai said.

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