Pay Link to Sustainability

To achieve its strategic priorities “Becoming a high value-added steel mill” and “Developing green technologies, energy, and resources”. The Company has established specific objectives and corresponding performance indicators under each strategic priority. The Company regularly reviews the implementation status of these objectives and reports the results to the Corporate Governance and Sustainability Committee and the Board of Directors for deliberation, in order to oversee progress toward these goals.

In order to encourage the management team to operate the Company in a manner that simultaneously enhances profitability and achieves sustainable development, the Company has, since 2023, incorporated the achievement of targets and indicators related to climate-related and other sustainability-related risks and opportunities into the performance evaluation of senior executives. Such evaluations are submitted to the Remuneration Committee and the Board of Directors for review and approval.

Compensation for senior executives comprises fixed and variable components. The variable component mainly consists of incentive bonus and employee remuneration, which are determined based on a comprehensive assessment of return on equity (ROE), return on assets (ROA), sustainability (including climate change) target management, risk management, and other performance indicators within the scope of their responsibilities.

Furthermore, in order to fulfill its commitment to sustainable development and actively respond to stakeholders' expectations regarding corporate sustainability, the Company has, since 2024, further strengthened the linkage between senior executive compensation and sustainability objectives. As a result, 10% of the employee remuneration allocated to senior executives is subject to weighting based on sustainability performance. Overall, the performance evaluation results of senior executives directly affect their compensation, thereby linking remuneration to achievements in climate change management and other sustainability-related objectives.

The Remuneration Committee convenes meetings semiannually to discuss, evaluate, and review the extent to which senior executives have achieved targets and indicators related to climate-related and other sustainability-related risks and opportunities. The evaluation results directly influence compensation payments. Details are as follows:

  • Climate-related targets and indicators: Based on the strategic priorities of becoming a high value-added steel mill and developing green technologies, energy, and resources, the Company has established two climate-related objectives: greenhouse gas management and energy management.
  • Weighting of climate-related targets and indicators: The achievement of climate-related targets and indicators accounts for 18% of the overall performance evaluation of senior executives.

President's (CEO) KPIs

Among the President's 2025 annual KPIs, the sustainable development performance (Critical risk management) accounts for 45%, cosisting of :

  • GHG management (10%)
  • Energy management-annual average power saving rate (20%)
  • Industrial safety (15%)

Executive Vice President's KPIs

Among the Executive Vice President's 2025 annual KPIs, the sustainable development performance (Critical risk management) accounts for 50%, cosisting of :

  • GHG management (20%)
  • Energy management-annual average power saving rate (20%)
  • Industrial safety (10%)

Vice Presidents' KPIs

Among the Vice President's 2025 annual KPIs, the sustainable development performance accounts for 51%, cosisting of :

  • Society participation/Employee care/Talent retention (3%)
  • Information security (4%)
  • Smart manufacturing (4%)
  • Industrial safety and environmental protection (13%)
  • GHG management (13%)
  • Company governance (6%)
  • Risk management (8%)

Position 2025 Annual KPIs The Implemental Strategy
President(CEO) Operational Finance (55%)
  • ROE(5%)
  • ROA(5%)
  • Other objectives related to steel operations (45%)
Sustainable development performance (Critical risk management) (45%)
  • GHG management(10%)Note I GHG emissions management
  • Energy management (20%)Note I Annual average power saving rate
  • Industrial safety (15%) Serious occupational accidents
Executive Vice President Operational Finance (50%)
  • ROE(7.5%)
  • ROA(7.5%)
  • Other objectives related to steel operations (35%)
Sustainable development performance (Critical risk management)(50%)
  • GHG management (20%)Note I GHG emissions management
  • Energy management (20%)Note I Annual average power saving rate
  • Industrial safety (10%) Serious occupational accidents
Vice President Operational Finance (49%)
  • ROE(5%)
  • ROA(5%)
  • Other objectives related to steel operations (39%)
Sustainable development performance (51%)
  • Society participation/Employee care/Talent retention (3%)
  • Information security (4%)Note I Enhance information security resilience and effectively respond to information security threats
  • Smart manufacturing (4%)Note I Development of smart manufacturing projects Promotion of smart manufacturing in production division
  • Industrial safety and environmental protection (13%) Note I Planning for the installation of electric vehicle charging facilities at plant sites and headquarters buildings
  • GHG management (13%)Note I Key engineering projects across the Group and plant sites(replacement and upgrading of obsolete equipment) GHG emissions management Assisting in the development of carbon reduction and low-carbon technologies
  • Company governance (6%)Note I Group tax governance and compliance with global laws and regulations
  • Risk management(8%)
  1. Among the sustainability performance indicators applicable to the President, Executive Vice Presidents, and Vice Presidents listed in the above table, those that are linked to the Company's six major sustainability risk themes and six major sustainability opportunity themes under IFRS are connected to the following topics:
    Sustainability risk themes: increased cyberattacks, geopolitical risks, and restrictions on greenhouse gas emissions or rising emission-related costs. Sustainability opportunity themes: advancements in artificial intelligence and computing efficiency, supportive incentive-based policies for low-carbon technology innovation, and growing demand for low-carbon products and services.
  2. Among the sustainability performance indicators applicable to the President, Executive Vice Presidents, and Vice Presidents listed in the above table, climate-related indicators include greenhouse gas management and energy management, while financial indicators include return on equity (ROE) and return on assets (ROA).

The Company incorporates the achievement of targets related to climate-related risks and opportunities (such as GHG management and energy management) into the performance evaluation of senior executives. The outcomes of such performance evaluations affect a portion of their variable compensation.

In the current year, 18% of senior executive compensation is linked to climate-related considerations. The Company plans to increase this proportion to 20% by 2028 and further to 30% by 2036, demonstrating senior management's commitment and concrete actions in addressing climate-related issues.