Sustainable Governance

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Executive Remuneration Policy

Sustainability

Arizon ESG-Linked Leadership Incentive Guiding Principle

I. Purpose

To fulfill Arizon’s commitment to sustainable development, the Company encourages senior executives to demonstrate leadership through active participation in environmental, social, and governance (ESG) initiatives. This Guiding Principle integrates such engagement and contribution into annual performance reviews and variable compensation considerations to support the Company’s long-term, sustainable growth.

II. Scope

This Guiding Principle applies to the Chairperson, Chief Executive Officer, President, Vice Presidents, and other senior executives of equivalent rank.

III. ESG-Related Performance Evaluation Dimensions

Depending on each executive’s role and annual business priorities, one or more of the following ESG dimensions may be incorporated into performance evaluation and goal setting:

  • Environment: Achievements in energy conservation and carbon reduction, process optimization, waste reduction and recycling, green supply chain management, and resource efficiency.
  • Social: Efforts in employee well-being, occupational health and safety, talent development, diversity and inclusion, community engagement, and social impact initiatives.
  • Governance: Leadership in ethical business practices, internal control and risk management, information security, sustainability disclosure, and stakeholder engagement.
IV. Remuneration Linkage and Principles

Executive compensation includes both fixed and variable components.

Variable compensation (such as annual or special bonuses) is determined based on overall business performance, individual contributions, and sustainability-related performance.

Within this evaluation framework, ESG-related objectives serve as one of the key factors influencing variable-pay outcomes, generally carrying an indicative influence of approximately 10%–20%.
The actual influence may vary depending on the executive’s role, annual business priorities, and the Company’s sustainability focus for the year.
The Sustainability Committee will review each executive’s leadership, engagement, and impact in ESG-related areas and provide recommendations for consideration by the Compensation Committee and approval by the Board of Directors.

This approach is intended to encourage senior leaders to integrate sustainability considerations into management practices and decision-making to support long-term value creation.

Target / Role
 Performance Indicators
 Execution Method (Weight)
General Manager
 Sustainability & Internal Control Indicators 20%
 Commit to implementing sustainability initiatives, emphasizing ethical business practices, legal compliance, and risk management, and executing key ESG tasks (with at least 10% of the indicators focused on corporate governance and risk management).
Senior Managers
 Sustainability & Internal Control Indicators 10%–20% (weight varies by role)
 1. Customer Relationship Management Customer Relationship Management 0~3%
(weight varies by role)
2. Supply Chain Management Supply Chain Management 0~2%
(weight varies by role)
3. Product Responsibility & Safety Product Responsibility & Safety 0~3%
(weight varies by role)
4. Innovation & R&D Innovation & R&D 0~2%
(weight varies by role)
5. Information Security Information Security 0~2%
(weight varies by role)
6. Talent Development Talent Development 0~2%
(weight varies by role)
7. Occupational Health & Safety Occupational Health & Safety 0~2%
(weight varies by role)
8. Human Rights Protection Human Rights Protection 0~2%
(weight varies by role)
9. Climate Change Response Climate Change Response 0~2%
(weight varies by role)
V. Governance and Disclosure

The Sustainability Committee is responsible for reviewing ESG-related performance of senior executives and reporting results to the Board of Directors on a regular basis.

Arizon will disclose this principle and its implementation in the Sustainability Report or other public documents to demonstrate the Company’s continued commitment to integrity, governance, and sustainable development.