Siliconware Precision Industries Co., Ltd. ("we", "SPIL" or "the Company") has always strived to provide high-value added solutions for our clients through our unique talent and advanced technology in IC packaging and testing. We firmly believe our consistent focus on improving our business and operations will continue to create shareholder value in this ever-changing industry.
In 2015, the global semiconductor industry faced an overall slowdown driven by higher competition combined with a saturated computer and mobile devices market. Additionally, lower-than-expected growths in developing countries led by the slowdown in China added further headwinds. Despite these challenges, SPIL still managed to outperform the OSAT industry in this past year. To further reflect our commitment in maximizing shareholder value, the board is proposing an increased dividend payout ratio of nearly 100% plus an additional distribution of NT$1 per share from capital reserves, marking a dividend totaling NT$3.8 per share.
Over the past year, while there have been distractions of hostile interest in acquiring the Company, we firmly believe that with your support, we are in a good position to grow our business the way we have strived to do in the past and do not need to be merged with our competitors. In fact, a merger out of hostile interest will result in the loss of overlapping clients and will drain our talent - one of our key competitive advantages. Though we understand the uncertainty associated with the outcome of such matters, our focus on growing the Company and generating shareholder value has never wavered. With that in mind, we seek your support at the upcoming annual general meeting for the below proposed items, in addition to routine business matters:
Update the Company's Articles of Incorporation (AOIs) to be in line with the latest regulatory environment
Additional cash payout of NT$1 per share from capital reserves
Amendments to certain articles of the Procedure for the Acquisition and Disposal of Assets
These proposals will allow us to focus our efforts on the organic growth of the business and will provide the much needed operational flexibility required to support our growth aspirations.
AGM Proposals to Seek Shareholder Support
Amendments to certain articles of the Company 's Articles of Incorporation (AOIs)
Proposal to update the business scope: To comply with the Company Act and business codes published by the Ministry of Economic Affairs ("MOEA").
Proposal to replace supervisors with audit committee and associated technical/language changes: In order to comply with regulations, we have created an audit committee in lieu of the supervisors and the necessary AOI revisions to reflect such change has to be effected this year. Additionally, we are required to have at least three and at least 1/5th of the board as independent directors. These changes ensure an independent voice that represents shareholder interest, in all matters of the board including remuneration, nomination of directors, and mergers and acquisition.
Proposal to update employee bonus and director compensation scheme: To comply with the Company Act and official order from the MOEA, employee and director compensation will be based on pre-tax profit and recognized as an expense in income statement as opposed to be based on after-tax profit and treated as earnings distribution previously.
Recognition of the Company's 2015 Business Report and Financial Statements
Recognition of 2015 Earnings Distribution (NT$ 2.8 per share)
Additional cash payout from capital reserves
Propose additional cash payout of NT$1 per share from capital reserves: The board of SPIL has approved to distribute cash dividend of NT$2.8 from 2015 earnings, which equates to an increased payout ratio of nearly 100%. To further reflect our commitment in maximizing shareholder value, the board has proposed an additional cash distribution of NT$1 per share from capital reserves, bringing total cash distribution to NT$3.8 per share.
Amendment to the Procedures for Acquisition and Disposal of Assets
Matters to be Recognized:
Other Proposals to Seek Shareholder Support
Proposal to increase the aggregate and individual limits on investments in securities: In order to maintain our competitive advantage through operational flexibility as well as required business expansions, we are putting forth a proposal to increase both the aggregate and individual limits on investments in securities. Our current aggregate and individual security investment limits are 20% of our Company's net worth, which is well below the average of the top 20 technology companies in Taiwan, putting us at significant disadvantage relative to our peers.
We propose to increase the limit on aggregate investments from 20% to 40% and the limit on individual security investment from 20% to 30%. This will afford us the requisite flexibility while still places us below the average and the median of our peer group, thus providing appropriate safeguards for our shareholders.
The limits have been unchanged since 2003, and given how the industry has evolved since then, such flexibility will allow us to support our growth aspirations in the Chinese market. We plan to invest in our Suzhou subsidiary for advanced IC packaging and testing solutions to capture the growth of China's semiconductor industry as it progresses. Your support in this matter is of utmost importance and will allow our board to make decisions that will benefit shareholders in a timely and pragmatic manner.
As mentioned earlier, the intent behind these changes is to ensure that we can focus on sustainable business growth. Despite outside distractions and hostile interests, our primary goal remains to maximize shareholder value over the long term. Your support on these matters will allow us to set the foundation for the long term and is extremely important so that we can collectively continue towards increasing shareholder value.
SPIL will continue to comply with the high standards of corporate governance as demonstrated in our track record. The company has ranked among the top 5% for two consecutive years in the Corporate
Governance Evaluation held by the Taiwan Stock Exchange Corporation since it began in 2015. A total of 1,447 companies listed on the TWSE/Taipei Exchange were evaluated in the Second Corporate Governance Evaluation, and only 49 companies received this award in two straight years. Further, the Company received special honors for two consecutive years since 2013 in the Excellence in Corporate Social Responsibility Award by the Common Wealth Magazine and the Taiwan Corporate Sustainability Award from the Taiwan Institute for Sustainable Energy. Chairman Bough Lin is also ranked at #20 on the list of Top 50 Taiwan CEOs in 2016 by Harvard Business Review.
The optimism about the future shared by all members of the Company remains strong in our culture. With the support of our employees, customers, partners and you - the shareholders, we have built a solid foundation for a bolder SPIL. We are now on the path for future success without the need for any outside intervention. We look forward to your support and seeing you at the upcoming AGM.
Yours Sincerely, Chairman Bough Lin
SPIL - Siliconware Precision Industries Company Ltd. issued this content on 18 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 18 April 2016 08:10:38 UTC
Original Document: http://www.spil.com.tw/news/file/1189/Letter to Shareholders 041816_with slides_EN.pdf