Evaluation Criteria and Process
- The Board of Directors establishes performance goals for the Chief Executive Officer and provides performance evaluations linked to strategic plans and annual work plans. This process supports appropriate consideration of compensation and incentive measures, in both short- and long-run, for the CEO on an annual basis.
- The Compensation Committee provides recommendations regarding the CEO’s performance indicators, reflecting both short-term and long-term business directions, as well as key objectives assigned by the Board. The Committee plays a role in evaluating the CEO’s performance during both the first and second half of the year and provides recommendations to the Board on these matters.
- The Board of Directors oversees the Key Performance Indicators (KPIs) of the Chief Executive Officer, with the Compensation Committee responsible for reviewing and making recommendations. These indicators are used in the CEO’s annual performance evaluation, which is directly linked to variable compensation, in order to align performance with the company’s strategic objectives and create long-term value for shareholders. The company reviews these indicators annually by benchmarking against peers in the same industry to ensure competitiveness and sound financial management. The Compensation Committee is responsible for verifying the evaluation results before submitting them to the Board of Directors for approval.
- The CEO performance evaluation criteria is divided into six key dimensions: Group Strategy, Company Performance, Financial Strategy, Strategic Capabilities, Branding and External Trust, and ESG. Each dimension carries a different weighting — for example, Financial Strategy accounts for 20%, while ESG accounts for 10%. Financial performance indicators emphasize metrics reflecting capital efficiency and returns, such as Total Shareholder Return, Average Return Spread, and Net Debt-to-Equity Ratio. ESG indicators reflect performance across environmental, social, and governance areas, selected based on materiality assessments and alignment with sustainability goals — for example, “Greenhouse Gas Emission Reduction” for the environmental dimension, “Workplace Safety” for the social dimension, and “Cybersecurity Incidents” for the governance dimension.
- The variable compensation of senior executives, such as the Chief Operating Officer (COO) and Chief Financial Officer (CFO), is directly linked to performance against the defined KPIs. This pay-for-performance approach ensures that rewards and incentives are effective and supports the organization’s long-term strategic objectives.
- For the integration of important ESG issues as part of the annual performance indicators for the Chief Executive Officer, the focus will be on performance in various aspects across environmental, social, and governance dimensions, which align with the organization’s materiality assessment and sustainability objectives. Examples of ESG indicators include employee engagement levels, number of significant governance complaints, number of cybersecurity incidents, reduction in GHG emission, and number of work-related fatalities, among others.
- In addition, the Chief Executive Officer’s performance in the past year was also included as an agenda item for the non-executive directors’ meeting without management’s presence. In 2025, the Board organized one such meeting. After the meeting concluded, the Board conveyed the feedback received from the meeting to the Chief Executive Officer for acknowledgment, to be used for further development or improvement in various areas.