Kumho Tire establishes Board of Directors policies to provide guidelines for the independence, diversity, and expertise of the board and its independent directors. We support the board in securing independent decision-making authority, ensuring effective management activities based on checks and balances.

🔗Independence, Diversity and Expertise Policy of the Board of Directors  🔗Corporate Governance Report

Board Independence

In accordance with the Commercial Act and our board independence guidelines, Kumho Tire strictly reviews the disqualification and independence requirements of independent directors and conducts the appointment process based on recommendations from the Independent Director Nominating Committee.

Board Diversity and Expertise

Kumho Tire’s board strives to achieve diversity in knowledge, experience, capability, and gender, appointing directors with rich experience and expertise across various fields to ensure rational decision-making. The board members possess professional experience in various fields such as finance, accounting, law, corporate management, and media, including two Chinese nationals and one female director. The board, leveraging this diversity and expertise, supports the activities of its subcommittees.

Board Training and Evaluation

Kumho Tire plans to conduct biannual training sessions on overall ESG management for board members starting in 2024 to enhance their understanding and expertise in ESG. Additionally, to improve transparency and efficiency in corporate management and to enhance operations, board evaluations will be conducted. The evaluations will be conducted annually, with board directors performing self-assessments of board operations, and will be expanded to include committee evaluations in the future.

Board Composition

As of March 2024, Kumho Tire’s board consists of eight members: one executive director, two non-executive directors, and five independent directors. To ensure the independence of the board, the majority are independent directors. The board chairman, Chai Yong Sen, who is the chairman of Doublestar Group, the major shareholder of Xingwei Korea (Kumho Tire’s major shareholder), is separate from the CEO. The board subcommittees include the Strategic Steering Committee, Audit Committee, Independent Director Nominating Committee, Compensation Assessment Committee, and ESG Committee. Each committee’s members are selected by suitability and independence for committee activities.

The Independent Director Nominating Committee reviews potential conflicts of interest and verifies whether candidates hold directorships in other companies, allowing concurrent positions in accordance with Article 34, Paragraph 5 of the Commercial Act and the current legal restrictions* on independent directors. Additionally, under Article 542 of the Commercial Act, when convening or announcing a general meeting of shareholders, the company transparently discloses the activities, remuneration, transactions with major shareholders of independent directors, etc.

* Current Legal Restrictions: Serving as a director, executive officer, or auditor of more than two other companies besides the listed company (i.e., allowing up to two concurrent positions).

Board Composition

(As of May 2024)

Board Skills Matrix

Board of Directors Operations

Kumho Tire deliberates and resolves major management decisions through its board of directors. Board resolutions require the attendance of a majority of the directors and the approval of a majority of the attending directors. Individuals with a special interest in a resolution cannot exercise voting rights. As of 2023, Kumho Tire held a total of nine board meetings to deliberate and resolve various agenda items.

Board Remuneration

The remuneration limit for directors is determined with the approval of the general meeting of shareholders. For registered directors, their remuneration is decided at the general meeting of shareholders and is paid according to the payment regulations established by the Compensation Assessment Committee within the approved limit. The remuneration of directors is discussed at an appropriate level by the board of directors, and it is paid within the remuneration limit approved at the general meeting of shareholders and disclosed through annual report and other documents.

Committee

Audit Committee

The Audit Committee consists of three independent directors with expertise in accounting and finance, as stipulated by relevant laws and internal regulations. It conducts audits of the organization’s financials, accounting, internal controls, etc. In 2023, the Audit Committee held a total of six meetings, reviewing audit matters from the audit team, quarterly financial results, etc. Additionally, training sessions were conducted for Audit Committee members to enhance their expertise and support their roles.

🔗Annual Report

Audit Committee Composition

Audit Committee Training Status

Independent Director Nominating Committee

Based on relevant laws, the company’s articles of association, and board regulations, the Independent Director Nominating Committee comprehensively reviews the eligibility of independent director candidates and recommends the final candidates. To maintain independence, the committee is composed of a majority of independent directors.

Strategic Steering Committee

The Strategic Steering Committee reviews major management issues and strategies proposed by the management team and supports decision-making. The committee comprises experts from various fields, including management, finance, and accounting, enabling a multifaceted approach to business strategies. 

Compensation Assessment Committee

The Compensation Assessment Committee is responsible for establishing a fair evaluation and compensation system for employees, discussing major HR policies, and deliberating and approving the appointment and dismissal of key executives.

ESG Committee

In 2023, Kumho Tire established and began operating the ESG Committee under the board of directors to address ESG management agendas in depth. The committee consists of three members, with a majority being independent directors to ensure independence.

Training for Independent Directors

Kumho Tire provides training for independent directors to enhance their role efficiency. In the second half of 2023, training sessions were conducted twice, covering the importance of sustainability reports, ESG disclosure issues and trends, the roles and responsibilities of the board, and accounting transparency.

Executive Liability Insurance

Kumho Tire has subscribed to Directors and Officers (D&O) Liability Insurance to strengthen the legal liability and management responsibility of executives for economic damages arising from wrongful acts, negligence, mistakes, etc. committed in the course of performing their duties.

Internal Control over Financial Reporting System

The CEO and the internal accounting manager of Kumho Tire evaluate the operation and results of the Internal Control over Financial Reporting (ICFR) system and report the findings to the Audit Committee, the Board of Directors, and the General Meeting of Shareholders. The company categorizes and manages control types into Entity-Level Controls (ELC), Process-Level Controls (PLC), and Information Technology General Controls (ITGC). These controls are effectively designed and operated according to the ICFR system’s conceptual framework for design and operation. With the implementation of the consolidated ICFR system in 2023, ten overseas subsidiaries (including four in China) have also established and are operating ICFR systems, considering local control environments.

External Auditor Selection Process

In accordance with Article 10 (Appointment of Auditors) of the Act on External Audit of Stock Companies and Article 542-11 (Audit Committee) of the Commercial Act, Kumho Tire, which is required to have an Audit Committee installed, appoints the auditor for the fiscal year before the beginning of each business year, adhering to the relevant laws and regulations. Additionally, as a publicly listed company, the same auditor is appointed for three consecutive fiscal years. For the 21st fiscal year, Han Young Accounting Corporation was appointed as the auditor, and they provided an unqualified opinion on the financial statements and the internal accounting management system.