Governance Structure

Company Overview

Formosa Petrochemical Corporation (FPCC) was founded in 1992 and deals mainly with the production and sales of oil products and fundamental petrochemical materials. It was the first private oil refining business in Taiwan to produce and sell oil products such as gasoline and diesel. Its naphtha crackers, on the other hand, produce fundamental petrochemical materials such as ethylene, propylene, and butadiene, with a throughput scale topping the domestic list. In addition, the Company has qualified heat and power combined co-generation system to supply various public utility fluids such as steam and power at its facilities in the Formosa Plastics Group Mailiao Industrial Park.

Governance Structure

The Board of Directors is the highest level governance unit of FPCC. There are three functional organizations under the Board of Directors: the Audit Committee, the Compensation Committee, and the Sustainable Development Committee. The Chairman serves as the Chairman of the Board of Directors and is responsible for convening board meetings and representing the Company externally. To ensure clear responsibilities in the organizational structure and the independence of company operations, the Chairman does not hold any managerial positions. For the Company's organizational structure, please visit the Company's website  (http://www.fpcc.com.tw/tw/about/organization). The Board of Directors passed the Code of Sustainable Development to set forth the Company's sustainable development-related policies, systems, management approaches, and communication and disclosure of information to stakeholders. Please refer to the Company's website (http://www.fpcc.com. tw/tw/corporate/policies) and annual report for the shareholders’ meeting.

Overview of Board Operations

Members of the Company's Board of Directors are elected by the shareholders’meeting in accordance with the Regulations Governing the Election of Directors. FPCC's director election adopts a candidate nomination system. The qualifications of director candidates are verified in accordance with the Company Act. The term of directors is three years. Requirements to ensure that the Board of Directors diversity policy is implemented and that directors have the knowledge, skills, competencies, and conflicts of interest avoidance mechanisms required to perform their duties are set forth in Article 32 of the Corporate Governance Best Practice Principles and Article 15 of the Rules of Procedure for the Board of Directors Meetings. Please see the Company's website  (http://www.fpcc.com.tw/tw/corporate/policies).

For detailed information on board members, please refer to the Company's website (https://www.fpcc.com.tw/tw/corporate/board-of-directors)

The Board of Directors currently has 12 members with an average age of 70 years old. Directors on average have serve approximately 13 years on the board, and 17% of directors are female. Board members include related parties of the Company, such as employees, investors/shareholders, customers, experts and scholars, providing the most suitable strategies and guidance for the Company's development. To improve directors’ professional competencies, legal literacy, and sensitivity to sustainability trends and green technology development, courses are arranged for directors to gain new knowledge each year. The continuing education courses arranged in 2024 were related to the management of impacts on material topics such as the Company's economic performance, climate change, and the environment. For more information, please refer to the “Corporate Governance Report” chapter of the annual report of the Company's shareholders’ meeting.

The education, experience, and professional knowledge of the Company's directors have been evaluated to be sufficient to manage the impact of climate change and other material topics. For details on their independence, continuing education, and conflicts of interest (including concurrent positions, cross-shareholdings, controlling shareholders, and related party transactions) please refer to the Company's website (http://www.fpcc.com.tw/tw/corporate/board-of-directors), the “Corporate Governance Report” chapter of the annual report, and the notes to the financial statements disclosing “Related Party Transactions.”

The Board of Directors, in principle, meets at least once a quarter. A total of 6 board meetings were held in 2024 with an attendance rate of 91%. The Company established the Board of Directors Performance Evaluation Guidelines in 2020, and the annual self- performance evaluations are conducted for the Board of Directors and functional committees. The evaluation method is that the members of the Board of Directors and the functional committees independently evaluate their overall performance and self-performance, in which evaluations of the Company's major strategic goals include the management results of various sustainability issues. Performance results of the overall Board of Directors and individual directors were excellent in 2024, and were submitted to the Board of Directors on December 12, 2024.

The Company's major key events and the communication method with the Board of Directors are mainly summarized in the Sustainability Report, which is reported to the Sustainable Development Committee every year and then reported to the Board of Directors. If a major project that requires urgent communication occurs during the period, it will be first reported to independent directors through the Audit Committee, and then reported to the Board of Directors. The Company did not have any major key events in 2024.

Note: The diversity policy and indicators of board members are disclosed on the Company's  website (https://www.fpcc.com.tw/tw/corporate/board-of-directors)

The director shareholding ratio of the Company has been approximately 76% for the past five years, which is far greater than the FSC's requirement of 2% at minimum for public offering companies of the same size. Furthermore, the shareholding pledge ratio of directors is 0%. These ratios show that the Board of Directors and shareholders of FPCC are highly correlated in terms of interests and hence the former is trustworthy for the latter. The related shareholding structure is disclosed on the Company's  website (http://www.fpcc.com.tw/tw/corporate/ownership).

Overview of Audit Committee Operations

The Audit Committee of the Company consists of 4 independent directors. The Audit Committee supervises the Company's business condition and financial position based on the principles of integrity and independence. It helps the Board of Directors carry out supervisory and other duties as set forth in the Company Act, the Securities and Exchange Act, and other related laws. Detailed operations are disclosed on the Company's website (http://www.fpcc.com.tw/tw/corporate/board-of-directors).

Note: Independent director Ze-fen Lin was newly appointed after the re-election of directors at the shareholders’ meeting on June 14, 2024.

Overview of Compensation Committee Operations

Currently, the 4 members of the Compensation Committee are all independent directors and no other stakeholders are involved. The committee is responsible for evaluating the remuneration policies and systems for the Company's directors and managers, and provides the Board of Directors with suggestions. This prevents remuneration policies from causing directors and managers to violate business ethics and engage in behavior that exceeds the Company's risk appetite. Detailed operations are disclosed on the Company's website (https://www.fpcc.com.tw/tw/corporate/committee).

Note: Independent director Sush-der Lee attended the meeting on January 23 by proxy. Independent director Ze-fen Lin was newly appointed after the re-election of directors at the shareholders’ meeting on June 14, 2024.

Operating Status of the Sustainable Development Committee

To meet requirements of the Corporate Governance Evaluation, the Sustainable Development Committee has 6 members, including the Company's Chairman, President, and all independent directors, and is responsible for reviewing the Company's sustainable development policy and management approach. The committee also supervises the implementation of tasks related to sustainable development, in order to strengthen the Company's resilience to climate change risks. Implementation results of the Company's sustainable development work are reviewed by the Sustainable Development Committee and then reported to the Board of Directors each year. The Sustainability Report is then published to communicate with employees.

Note: After the re-election of directors at the Company's shareholders’ meeting on June 14, 2024, independent director Ze-fen Lin and director Keh-yen Lin were newly appointed as Sustainable Development Committee members. Mr. Bao-lang Chen resigned from the positions of Chairman and Sustainable Development Committee member.

Compensation for Directors and Managers

To meet requirements of the Corporate Governance Evaluation, the Sustainable Development Committee has 6 members, including the Company's Chairman, President, and all independent directors, and is responsible for reviewing the Company's sustainable development policy and management approach. The committee also supervises the implementation of tasks related to sustainable development, in order to strengthen the Company's resilience to climate change risks. Implementation results of the Company's sustainable development work are reviewed by the Sustainable Development Committee and then reported to the Board of Directors each year. The Sustainability Report is then published to communicate with employees.