Operation and Governance

Governance Framework

Advantech was founded in 1983. Since then, the company has been playing the role of a pioneer in developing and manufacturing high-quality and high-performance calculation platforms. We now offer various solutions and services, including comprehensive software–hardware system integration, customer-oriented design service, and global logistics support. In 1999, Advantech became a listed company in Taiwan. Advantech Headquarters is located in Neihu Science Park, Taipei, Taiwan. Based on our customers’ needs, the company is divided into three major business groups: Industrial IoT, Embedded IoT, and Service IoT. We operate out of 27 countries across Europe, the Americas, and Asia. Below table shows our product sales performance for 2020.

Advantech’s 2020 product categories and corresponding sales performance

Ratio Major products

Sales amount (TWD, thousand)

%

Embedded boards and systems

23,887,240

47%

Industrial computers and industrial controllers

21,424,703

42%

After-sales service and other services

5,807,465

11%

Total

51,119,408

100%

Advantech and our affiliates are mainly involved in product manufacturing, assembly, sales, and after-sales services for industrial computers. Some of our affiliates invest in technology and sales activities related to our products. Advantech’s organizational structure is shown in below figure.

Advantech organizational structure

Advantech values corporate governance and strives to realize the Lita spirit, and we continuously seek to strengthen the composition and functions of our Board of Directors. In addition to ensuring shareholders’ legal rights, we also consider the benefits we bring to our stakeholders. Our Board of Directors follows relevant regulations and uses the powers conferred by the shareholders’ meeting to establish various regulations and guidelines. The board also supervises the implementation results of various projects and operational goals. Biannually, we hold expanded board meetings to discuss topics such as industry and organizational reform, operation model innovation, succession planning, and mid- to long-term visions.

We have established the Audit Committee, the Remuneration Committee, and the Corporate Development and Nomination Committee to consolidate the various supervisory and internal auditing functions, provision of salary incentives, and mechanisms for upper-level talent cultivation. In 2020, we established the ESG & Corporate Sustainability Committee and Office with the Chairman as the responsible person, the aim of which is to more broadly promote environmental sustainability, social responsibility and giveback, and corporate governance.

Board of Directors Composition and Functions

Board of Directors Composition and Functions

Advantech’s board consists of seven directors, including four directors and three independent directors with a term of 3 years. Following the candidate nomination system in the Company Act Article 192-1, the directors were selected from a candidate list at the shareholders’ meeting. In 2020, the board was reelected.

The board has a diverse and professional background. Three directors have vast experience in Advantech’s core industries, three are internationally renowned CEOs or senior managers of foreign businesses, and one is a famous professor. The other functional Committees invite scholars and experts to serve as consultants or become regular committee members. In 2020, six board meetings and two expanded Board of Directors meetings were held. All board members were present at all meetings.

In addition to attending these meetings, board members are often invited to discuss forward-looking topics, conduct upper management interviews, and attend industry forums held by Advantech. We offer monthly courses from the Taiwan Corporate Governance Association, Securities and Futures Institute, and Taiwan Institute of Directors for board members to select what interests they wish to pursue through study. The overall operation and performance of the board are regularly reviewed by a third party. In 2020, the review result was 6%–20%. The board members achieved an overall satisfaction rate of 95% with regard to board operations.

Please refer to the Advantech official website for more information on Corporate Governance and the Board of Directors.

Internal Audit

The purpose of Internal Audit is to review and evaluate the effectiveness of our internal control process design and actual functioning on a day-to-day basis. Advantech requires internal auditors to check major operation processes, to objectively review law and regulation compliance, and to assist the board and management with reaching their financial, performance, and asset protection goals, and to reasonably guarantee the reliability of financial reporting and conformity to related laws.

Advantech’s Internal Audit Unit is an independent unit that reports directly to the Board Audit Committee. To further improve the company’s overall operational efficiency, the selected internal auditor is the business partner of all operation units within the company, and they are responsible for assisting with improving process efficiency, eliminating operation bottlenecks, engaging necessary resources, and sharing best practices among different business units. For more details please refer to Advantech’s official website Corporate Governance.