Composition

Governance Structure and Composition

As the highest decision-making body of Daejoo Electronic Materials, the Board of Directors (BOD) is operated on the basis of checks and balances with the management. Currently, the BOD consists of three inside directors, three independent directors and, one non-executive director. Of the seven members, three are standing directors and four are non-standing directors.

Inside Directors and Independent Directors

Nomination and Selection of the Highest Governance Body

Independence
To maintain the independence of the BOD, persons who are not affiliated with the management are appointed as independent directors. Unlimited partners or directors of other companies in the same industry cannot become directors without BOD approval. In addition, the voting right exercise is limited for directors who have special interests in the BOD resolutions. As of 2023, the rate of independent directors, which must be maintained at 25% or higher, is over 40%.

Expertise
The director candidates are recommended and appointed based on their competencies and qualifications as well as the skill set of all directors for contribution to the Company’s long-term growth and development. The BOD consists of directors with extensive field experiences or professional knowledge in diverse fields ranging from leadership and core industries to finance and accounting, risk management, law and public policies, merger and acquisition, capital market, international relations, environmental, social, and governance (ESG), etc. The directors are provided with opportunities for participation in seminars and training sessions held by external experts to enhance their expertise.

Diversity
Promoting sustainable growth together with various stakeholders including shareholders, customers, and local community as the management philosophy and key strategy, Daejoo Electronic Materials reflects this as well to the BOD composition; thus pursuing diversity of the directors in terms of race, gender, age, nationality, education, religion, etc. We strive to ensure diversity in the BOD composition by preferentially considering various factors such as gender, age and nationality.

Efficiency
Extraordinary BOD meetings can be convened whenever necessary; to guarantee the directors’ participation, all directors can vote on agenda items using a voice communication system without having to attend the meetings in person. Major items for discussion are reviewed prior to a BOD meeting, with any and all questions or requests of directors examined by the relevant organizations to provide additional explanations prior to the convocation of the respective BOD meeting. In addition, the BOD’s right to advice from an external advisory body is stipulated in the Audit Committee regulations.

Chair of the Highest Governance Body

The BOD of Daejoo Electronic Materials is chaired by the CEO. Considering the special nature of the industry where business expertise is critical due to rapid changes in the domestic and international management environments, CEO Il-ji Lim concurrently holds the position of chairperson of the BOD. For agenda items that require objective deliberation and specialized knowledge, decisions are made by actively collecting independent directors’ proposals.

Role of the Highest Governance Body in Overseeing the Management of Impacts

As of 2023, Daejoo Electronic Materials operates two subcommittees of the BOD. At the extraordinary shareholders’ meeting held on June 13, 2024, the Articles of Association were amended to establish other committees. Then, on July 8, 2024, the BOD installed the ESG Committee and established the regulations for the ESG Committee operation.

Governance Body Composition

List of Subcommittees and Their Roles (as of Jul. 8, 2024)

BOD Composition Plan

Conflicts of Interest

BOD Independence and Transparency
To keep the management in check, the BOD of Daejoo Electronic Materials is organized with two independent directors (40%) out of its five members as of 2023. In addition, the Audit Committee consists entirely of independent directors to secure independence from the management. The BOD guarantees the integrity of the Company operations by maintaining transparency and independence.

Independence of Independent Directors
The independence of an independent director is determined according to Article 382 and Article 542-8 of the Commercial Act. If an independent director falls under any of the reasons for disqualification, he or she is determined not to be independent. In particular, in the following cases, the independent directors’ activities are restricted: (1) A person who engaged in the Company’s regular business; (2) a person with vital interests in the Company’s largest shareholder and CEO; (3) a spouse, lineal ascendant, or lineal descendant of the Company’s director, auditor, or executive officer; (4) an employee who has held office within the past five years; or (5) an employee of an accounting firm that handled the Company’s audit operations

Independent Audit Committee Operation
Daejoo Electronic Materials secures the independence of the Audit Committee from the management by appointing all members as independent directors. According to Article 3 of the Audit Committee regulations, we provide advice from an external expert at our own expense. We also designate a support division to ensure the successful operation of the Audit Committee. The Internal Accounting Team responds to the Audit Committee’s requirements, supports practical operations including sending of financial reporting-related data and meeting operation, and assists the Audit Committee in designing the internal control system and evaluating the overall operating status.

Audit Committee Training
Daejoo Electronic Materials completed training provided by Samil PricewaterhouseCoopers and the Kosdaq Listed Companies Association to improve the competency of the Audit Committee. Audit Committee members An-cheol Lee and Cheol-su Lee attended the training conducted by Samil Academy and Kosdaq Listed Companies Association on November 30 and December 1, 2023, respectively.

BOD Operation Highlights

Voting Right Exercise at the General Shareholders’ Meeting for the 43rd Period

Voting Right Exercise by Agenda Item

Five-year Dividend Information

BOD operation

Voting Right Exercise at the General Shareholders’ Meeting for the 43rd Period

Ordinary Resolution

Communication of Critical Concerns

The BOD of Daejoo Electronic Materials is operated according to the BOD regulations, and related data are provided at least two days prior to a BOD meeting convocation so that the directors can review the agenda items in advance. The key items are reported to the BOD in advance, discussed by the directors for feedback, and resolved by the BOD. In 2023, 27 BOD meetings were held, and 30 agenda items including convocation of the general shareholders’ meeting and management performance outlook report were reported to and approved by the BOD. The BOD resolution requires attendance by a majority of the directors. The BOD attendance rate by inside and independent directors is 86.5%, and the percentage of independent directors is 40%. The key roles of the Audit Committee are to evaluate the appropriateness of the internal control system, establish and operate internal audit plans, present the audit results, propose improvement plans, etc. The financial statements of 2023, results of the external auditor review, and audit performance report were handled as key agenda items.

Remuneration Policies

The members of Daejoo Electronic Materials’ highest decision-making body and the remuneration policy for senior executives are as follows: In addition to the fixed wage, performance-related pay is provided according to the performance. Signing bonus or sign-on incentive is not provided, and the salary refund system is not operated.

Process to Determine Remuneration

There is no specific method to seek for or take into consideration the opinions of stakeholders (including shareholders) on remuneration. In addition, remuneration consultants do not participate in the determination of remuneration, and consideration for their independence is not necessary. There is no result of voting by stakeholders (including shareholders) on the remuneration policy and proposals. The BOD remuneration is determined by resolution of the general shareholders’ meeting and paid within the limit of director remuneration specified in the internal regulations with the directors’ expertise, contributions, responsibilities, etc. considered. As of the end of 2023, the total director remuneration approved by the general shareholders’ meeting is KRW 7,000 million, and the amount paid is KRW 2,234 million.

Annual Total Remuneration Ratio

In 2022, the base salary for research, sales management, management support, quality control, and technical sales duties was increased by 5%. In addition, the base salary for manufacturing, technology, and facility-related duties was increased by 3%. In 2023, the base salary was increased by 3%.

*Total Annual Remuneration: Ratio of the wage of the highest salary earner to the average workers’ wage excluding the wage of the highest salary earner

Audit Committee Operating Regulations

BOD Regulations