LITE-ON is committed to pursue the transparency, timeliness and fairness of corporate governance and financial report. In order to complete and strengthen the mechanism of organizational operation, LITE-ON established functional committees as “Audit Committee”, “Compensation Committee” and “Growth Strategy Committee” in the board.

Audit Committee

Chairperson: Independent Director Kuo-Feng Wu
Members: Independent Director Harvey Chang, Independent Director Edward Yao-Wu Yang, Independent Director Albert Hsueh

The Audit Committee consists entirely of independent directors. The duties of its four members are to assist the board of directors in reviewing the company's financial statements, internal control systems, audit practices, accounting policies, major asset transactions, and appointment/dismissal of external auditors, finance officers, accounting officers, and internal auditors so as to ensure compliance with government regulations.

Effective internal control systems and audit operations are the foundation of sound corporate governance. In order to maintain an effective internal control system, particularly in the area of risk management, financial and operational control, the Audit Committee regularly reviews reports submitted by internal auditors and assesses the independence of the company's financial statement auditors, thereby ensuring the utmost integrity in financial reporting.

Communication between independent directors and internal/external auditors:

• The Chief Audit Officer reported to the Audit Committee on the establishment and amendment to the internal control system.
• The Chief Audit Officer reported to the Audit Committee on the conduct of internal audits and the findings.
• The Chief Audit Officer reported to the Audit Committee on the annual audit plan and the implementation of the plan.
• The Chief Audit Officer reported to the Audit Committee on the findings of each audit and the tracking of corrective actions and preventive actions.
• The Chief Audit Officer provided information on the addition or amendment of laws governing securities and exchange to the Audit Committee.
• The Chief Audit Officer presented to the Audit Committee the report on the conduct of special audits prescribed by the committee and the findings.
• Before year start, the certified public accountants reported to the Audit Committee the valuation of independent, annual service contents and compensation.
• The certified public accountants reported to the Audit Committee on the planning, implementation, and result of each period of the year.
• The certified public accountants reported to the Audit Committee on the quarterly and the annual external audits.
• The certified public accountants reported to the Audit Committee on newly established statement of financial accounting standards and related laws on securities and exchange any time as needed.
• The certified public accountants reported to the Audit Committee in time when special issue occurs (no special issue occurred in 2015).
  

The Compensation Committee

Chairperson: Independent Director Harvey Chang
Members: Independent Director Kuo-Feng Wu, Independent Director Edward Yang, Independent Director Albert Hsueh

The Compensation Committee was established in 2009 to strengthen corporate governance and align the company with international practices. The Compensation Committee has been authorized by the board of directors to supervise, review and decide the company's compensation policies. It was the first Compensation Committee in Taiwan to be granted powers second only to those of the board of directors among publicly-listed companies at that time, something which soon became norm for all local companies.

Duties of the Compensation Committee extend beyond employees' incentives and bonuses, to cover performance appraisals and remuneration of directors and executive managers as well. LITE-ON's Compensation Committee consists of four members; all of whom are chosen from independent directors to ensure objectivity, professionalism and fairness of the committee, while avoiding any conflicts of interest those members may have with the company.

The Compensation Committee reviews the company's remuneration policies and plans on a regular basis to ensure that they sufficient to attract, motivate and retain talent. The committee reviews the performance and remuneration of directors, the CEO and managers, and evaluates employee bonuses on a yearly basis. To ensure that its compensation packages reasonable and competitive as a whole, the company regularly invites professional consultants to conduct overall comparison and analysis of the company's compensation packages and market rates. The results are duly submitted to the Compensation Committee.

Remuneration of directors, LITE-ON's highest level of governing body, is distributed according to the duties and independence of the directors and the duties associated with serving concurrently as the committee chairman. Furthermore, the total amount paid to the directors is linked to business performance by a percentage and subject to a maximum. The amount will be reviewed by the Compensation Committee, and may not be implemented without the board's approval.

According to LITE-ON's "Compensation Committee Organizational Rules," the Compensation Committee convenes at least once every six months. Region Ratio of highest compensation to the median (**) (time(s)) Ratio of salary increase for highest compensation to the median (time(s))

(*) The compensation includes salary, meal allowance, and fixed bonus; only information of the parent company is disclosed. (**) Annual salary has been estimated based on employees' monthly salary as at the end of December. Note: China Statistics are derived from major plants based in Dongguan/ Guangzhou/ Changzhou/ Beihai/ Tianjin.

Growth Strategy Committee

**Chairperson: Independent Director Edward Yao-Wu Yang
Members: Director Raymond Soong, Director Warren Chen, Director Keh-Shew Lu, Independent Director Harvey Chang

In order to enhance and accelerate the growth policies of LITE-ON Technology and LITE-ON Group, the Growth Strategy Committee was established in 2010. The Committee is authorized by Board of Directors to direct and review the Company’s and the Group’s overall growth strategies, and to preview the Company’s and the Group’s important investment projects. It reports its resolutions regularly to the board of directors. The Committee’s direction and assistance extend to LITE-ON Technology and its subsidiaries and business units designated by LITE-ON Technology. The Committee consists of at least 5 directors from LITE-ON. The candidates for deputy convener and members shall be nominated by the Board of Directors. The Company may, if necessary, retain external advisors to provide the committee members with the comments needed by the members, but the external advisors may not participate in making resolutions. The Committee shall call the committee meeting at least once every six months, and the meeting shall be attended by more than two-thirds of the committee members, and may make resolution upon agreement of a majority of the present members. The Committee will report any resolutions made at the meeting to the Board of Directors. A total of two Growth Strategy Committee meetings were held in 2015.