avatar Acer Europe B.V. Finance, Insurance, And Real Estate
  • Location: NOORD-BRABANT 
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    TSE : 2353 Publication Date : April 14, 2020 www.acer-group.com


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    APPENDIX 1. Name, Title and Contact Details of Company's Spokespersons: Principal Meggy Chen CFO +886-2-2696-1234 Meggy.Chen@acer.com Deputy Wayne Chang Manager +886-2-2719-5000 Wayne.Chang@acer.com 2. Address and Telephone Numbers of Company's Headquarter and Branches Office Address Tel 8F., No.88, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Acer Inc. +886-2-2696-1234 Taipei City 221, Taiwan Acer Inc. 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., +886-2-2719-5000 (Shareholder Services) Taipei City 105, Taiwan Acer Inc. 3F., No.139, Minzu Rd., East Dist., Hsinchu City +886-3-534-9490 (Hsinchu Branch) 300, Taiwan Acer Inc. 3F., No.371, Sec. 1, Wenxin Rd., Nantun Dist., +886-4-2250-3355 (Taichung Branch) Taichung City 408, Taiwan Acer Inc. 4F.-6, No.38, Xinguang Rd., Lingya Dist., +886-7-338-8386 (Kaohsiung Branch) Kaohsiung City 802, Taiwan Acer Inc. No.28, Neixin Rd., Luzhu Dist., Taoyuan City 338, (Shipping & Warehouse +886-3-324-5100 Taiwan Management Center) 3. Address and Contact Details of Acer Shareholders' Services Address: 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan Tel: +886-2-2719-5000 E-mail: stock.affairs@acer.com 4. Address and Contact Details of Auditing CPAs in the Most Recent Year Name: Huei-Chen Chang and Tzu-Chieh Tang at KPMG Address: 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Tel: +886-2-8101-6666 Website: www.kpmg.com.tw 5. Overseas Securities Exchange Listed Market for GDRs: London Stock Exchange Market For further information, please refer to Website: www.Londonstockexchange.com 6. Acer Group Website: www.acer-group.com


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    2019 Award Winners Five Acer products received an iF Design Award in 2019. Winning products include the Predator X DESIGN AWARD gaming desktop, Predator Triton 900 gaming notebook, Predator Thronos gaming chair, Acer 2019 Swift 7 ultra-thin notebook and the Acer Smart Speaker. GERMANY iF Product Design Award 2019 © Acer believes that a brand is a promise made to consumers. Living up to its promiseof providing innovative and excellent devices, the Predator gaming brand was distinguished from 8,697 global reddot award 2019 entries to become the first gaming brand to ever win the German Red Dot Award. brand = © GOOD DESIGN “sy coNpunzi GERMANY Red Dot Brand Design Award Acer Products AWARD 2019 Several Acer products received Red Dot awards for product design in 2019. Winning products include the Acer Swift 7 ultra-thin notebook, Acer Swift 5 notebook, Acer Chromebook 715 reddot award 2019 notebook, Acer Chromebook 11 notebook, Acer aiSage edge computing device and the Predator winner XB3 Series of gaming monitors. GERMANY Red Dot Product Design Award Acer’s ultrathin and light Swift 7 (SF714-52T ) was awarded a CES 2019 Innovation Award. It CES NEN features ultra-narrow bezels that grant an unprecedented 92% screen ratio and is only 890 grams AWARDS light, making it easy to put into a bag and take along for business productivity anywhere. USA CES Innovation Awards in Computer Hardware & Components Bee) © GOOD DESIGN COMET Predator Products AWARD 2019 Four Acer notebooks received Good Design Awards in 2019. Acer’s ConceptD 7 and ConceptD 9 were designed for creators and feature elegant and minimal designs. The Acer TravelMate P6 is a GOOD DESIGN strong and durable notebook with incredible battery life and performance that mobile profes- AWARD 2019 sionals can rely on. The Acer Swift 7 is an ultrathin notebook that is easy to carry. JAPAN Good Design Award 2019 a asa The Predator Thronos gaming chair won a Gold Award at Computex 2019, the highest honor offered for design. Acer’s smart roadside parking meter system also won a “Specialty award”. COMPUTEX degold award 2019 Other award winning products include the ConceptD 500 workstation, Predator Triton 900 TAIWAN gaming notebook, Acer Swift 7 ultrathin and light notebook, Acer OJO 500 Microsoft Mixed Computex d&i Award 2019 Gold Award/Specialty Award/Innovative Design Award Reality Headset and the Acer aiSage computing device. GOOD DESIGN AWARD 2019 ru ConceptD Products


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    Concept D CREATIVITY DECODED About Creator Collaborations ConceptD has the power to produce the finest creative work, from graphic rendering to web design and from video editing to product rendering, giving creatives the hardware they need to realize their wildest dreams and unleash their most radical ideas. Through our Creator Collaborations, we strive to promote creativity in all its forms whenever and wherever we can, providing creators with the resources needed to produce their dream passion projects.


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    DISCLAIMER This is a translation of the 2019 Annual Report of Acer Incorporated (the “Company”). The translation is intended for reference only and nothing else, the Company hereby disclaims any and all liabilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and all matters related to the interpretation of the subject matter stated herein.


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    Acer Incorporated 2019 Annual Report Index INDEX 1 Business Report to Shareholders 04 6 Corporate Social Responsibility 91 1.1 2019 Operating Report 07 6.1 Environment, Safety and Health Management 93 1.2 2020 Business Plan 07 6.2 Supply Chain Management 95 6.3 Communication 96 6.4 Information Security and Privacy Protection 97 2 Company In General 10 6.5 Community Involvement 6.6 Social Responsibility Implementation Statusas Required by the Taiwan Financial Supervisory 98 2.1 Date of Founding 11 99 Commission 2.2 Brief Account of the Company 11 3 Corporate Governance Report 15 7 Financial Standing 102 7.1 Five-year Consolidated Financial Information 103 3.1 Organization of the Company 16 7.2 Five-year Financial Analysis 107 3.2 Information Regarding Board of Directors and Key Managers 18 7.3 Audit Committee's Review Report 110 3.3 Corporate Governance Status 36 7.4 Consolidated Financial Statements Audited by CPAs of the Past Year 110 3.4 Information Regarding the Company's Audit Fee and Independence 64 7.5 Parent-Company-Only Financial Statements Audited by CPAs of the Past Year 110 3.5 Information on replacement of certified public accountant 65 3.6 The company's chairperson, general manager, or any managerial officer in charge of finance 7.6 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties 110 or accounting matters has in the most recent year held a position at the accounting firm of its 65 certified public accountant or at an affiliated enterprise of such accounting firm Review of Financial Position, Management Performance and 3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders 3.8 Relationship among the Top Ten Shareholders 65 67 8 Risk Management 111 8.1 Financial position (Consolidated Financial Statements) 112 3.9 Ownership of Shares in Affiliated Enterprises 68 8.2 Financial performance (Consolidated Financial Statements) 113 8.3 Cash flows (Consolidated Financial Statements) 114 8.4 Major capital expenditures and impact on financial and business in recent years 114 4 Capital and Shares 69 8.5 Long-term investment policy and results 115 4.1 Sources of Capital 70 8.6 Risk Management 115 4.2 Corporate Bonds 74 8.7 Other Necessary Supplement 124 4.3 Special Shares 74 4.4 Global Depository Receipts (GDRs) Issuance 74 4.5 Employee Stock Options 75 Special Notes 125 4.6 Restricted Stock Awards 75 1. Information related to the company's affiliates 126 4.7 Issuance of New Shares Due to Company's Mergers and Acquisitions 75 2. Private Placement Securities in the Most Recent Years 154 4.8 Issuance of New Shares for Capital Increase by Cash 75 3. Status of Acer common shares and GDRs acquired, disposed of, and held by subsidiaries 155 4. Other matters that require additional description 155 5 Acer's Business Formula 76 Appendix 156 5.1 Business Content 77 Appendix I 2018 Consolidated Financial Statements 156 5.2 Keys to a Sustainable Future 84 Appendix II 2018 Parent-Company-Only Financial Statements 275 5.3 Employees 85 5.4 Important Contracts 90 2 3


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    Acer Incorporated 2019 Annual Report Busine ss Re p ort Business Report to Shareholders Acer has made significant progress with the dual transforma- open beta stage, it is an open community platform that allows tion of our core business and new initiatives in 2019, and we players to build their team, train, and challenge for victory. are pleased to share with you key developments that dem- Through esports, Acer will engage new audiences while bring- onstrate the forward-looking mindset of a sustainable com- ing innovations and game-changing designs first to market. pany. Opportunities as well as challenges have arisen, in fact, In the PC business we have continued to challenge ourselves the industry's CPU supply issue that began in late 2018 per- and innovate. We maintained our leading edge in the thin- sisted throughout 2019, and has been reflected in our con- 1 and-light notebook segment with the Swift 5 as the world's solidated revenues, which was down slightly year-over-year lightest 14-inch notebook, under 900 g. Worldwide, Acer at NT$234.29 billion, with net income of NT$2.63 billion, and gaming monitors ranked No. 1 (Q1-Q3 '19, IHS). As we con- earnings per share (EPS) at NT$0.87. tinue our leadership in these two segments, we unveiled a new The pursuits in technological innovation, broadening the brand of high-end PCs and monitors optimized for creators boundaries of the PC business and new markets, and creat- such as graphic designers, filmmakers, engineers, architects, ing multiple growth engines are the foundations of Acer's developers and others. The pristine yet powerful ConceptD dual transformation. In the PC business we have focused on portfolio, with quiet operation and high color accuracy, has segments with growth opportunities, such as ultra-slim note- been hailed as the Windows comparison of the Apple Mac, as books and gaming PCs. Our efforts have been rewarded with well as receiving more the 40 “Best of Show” accolades re- Business Report year-on-year growth for Acer gaming PC and ultrathin note- book shipments exceeding the industry (Source: FY2019, GfK cently at the CES consumer show, reflecting the media's posi- tive reception of the brand. to Shareholders & NPD), and ranking No. 2 in Taiwan patent applications with 565 filings – up 19% from the previous year. Making up the other part of Acer's dual transformation is our multiple business engines, which have kept their momentum At the same time, Acer's corporate responsibility efforts have and have seen viable growth, these include Acer Cyber Secu- consistently been recognized by global sustainability indices rity, Acer Synergy Tech (AST), Weblink International, and Acer that benchmark environmental, social and governance (ESG) e-Enabling Service Business, and more. The strategy of list- performance of organizations. For the sixth consecutive year ing our subsidiaries is also progressing accordingly. During the we have been listed in the Dow Jones Sustainability Indices fourth quarter, AST became listed on the emerging market of (DJSI) Emerging Markets Index. the Taipei Exchange, Weblink International began its public of- fering process, with more in the pipeline. These new business- In the gaming field, Acer has created an ecosystem with pow- es are also making steadily increasing contribution to Acer's erful PCs and cool gadgets, esports events, and an esports overall revenues. social platform. Our flagship Predator PCs, and Predator Thro- nos gaming chair provide the ultimate gaming experience. We Many of our new initiatives are making good progress. Gad- not only sponsored esports events but also hosted our own geTek captured great international media attention with the Asia Pacific Predator League with growing success. The 2019 launch in the Vatican of the “Click to Pray eRosary” smart tournament drew 3,530 teams who competed for months wearable for the Catholic community, reaping 2500 media ar- and battled for the championship in Thailand. The 2020 fi- ticles. In the biotech realm, we forged a cross-industry coop- nals will bring the league to a higher level with almost 20,000 eration with Novartis Taiwan, where the companies will focus tickets sold already. Finally, Planet9 is our new brand and lat- on artificial intelligence (AI) technology in areas such as clini- est venture in gaming announced in September. Currently in cal trial design, disease detection, and patient care integra- 4 5


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    Acer Incorporated 2019 Annual Report Busine ss Re p ort tion. Acer and Novartis will benefit from each other's global operations to bring smart medical products to markets, form- 1.1 2019 Operating Report ing a win-win opportunity. 1.1.1 Operating Results and Earning Abilities More exciting developments of our AI-based technologies in- clude the indoor smart air monitor solution, developed by our Financial Information (Consolidated) AI research team in collaboration with experts in the field of Unit: NTD Thousands air quality. Plans are in place to serve 1300 locations including Item 2018 2019 schools in mid and southern Taiwan in 2020. Acer will provide Net revenue 242,270,406 234,285,354 a one-stop shop air quality improvement solution from detec- Gross profit 25,828,199 24,716,786 tion, data analytics, reporting, solution, to maintenance. Also Operating Results in the realm of smart cities, following the success of Taiwan's Net income attributable to 3,060,429 2,632,565 shareholders of the Parent first roadside Smart Parking Meter BOT project in Tainan by Acer ITS, more smart parking meters will be promoted to be Return on assets(%) 1.95 1.75 implemented in other cities. Return on equity(%) 4.96 4.35 Earning Abilities Net income ratio(%) 1.20 1.10 Without a doubt, Acer has so much under development and we are constantly seeking for new prospects. With your trust and EPS(NTD) 1.01 0.87 support, Acer's goal is to bring higher value to our customers, In 2019, operating revenue was NT$242.3 billion with 3.30% decline year-over-year. Gross profit was NT$24.7 billion with 4.30% shareholders and employees, and to become an indispensable decline year-over-year. Net income was 2.6 billion, a year-over-year decline 13.98%. In 2019, EPS was NT$0.87, a decrease part of life. Thank you. NT$0.14 from the 2018 level of NT$1.01 Due to down in net income, return on assets and net income ratio were all declined in 2019. Sincerely, 1.1.2 Budget Expenditure in 2020 Not applicable Jason Chen Chairman of the Board Jason Chen 1.2 2020 Business Plan Meggy Chen 1.2.1 Business Strategy Corporate Officers 1. From gaming hardware to esports, expand to an esports social platform to form a comprehensive gaming ecosystem. Develop industry-leading thermal technologies and powerful performance to elevate brand premium. Sophia Chen 2. Create a portfolio of products tailored for different market preferences and needs. Under the new creator brand, introduce more desktop, notebook and monitor models for the creator segment. Continue to innovate in gaming PCs, ultra-thin & light Accounting Officer notebooks, Chromebooks, and all-in-one PCs. 3. Become a corporate group with multiple-growth engines, with subsidiaries going public to foster entrepreneurship as an im- portant step to achieving the goal, and exploring new realms and partnerships. 4. Provide AI-ready enterprise solutions that leverage big data analytics, and the Internet of Things (IoT), such as smart transpor- tation, smart city, smart health, and smart gadgets that enhance the quality of lives. 5. Efficiently utilize resources within company and among subsidiaries, enhance internal communications on Company's global efforts in bridging the digital divide and environmental sustainability. Initiate internal environmental campaigns. 6 7


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    Acer Incorporated 2019 Annual Report Busine ss Re p ort 1.2.2 Business Goals 1.2.5 Impact on Company Due to Competition, Governmental 1. Enhance brand premium in order to create high-value, high-margin products and solutions. Regulations and Overall Macro Market 2. Evolve with the PC landscape, focus on the areas with high growth potential and that are profitable, and create differentiation 1. Respect international laws and regulations on information privacy and security, such as GDPR, especially in the realms of AI and value to fulfill and exceed people's needs. and cloud services. 3. Explore new market domains to broaden our business boundaries in the traditional PC business and beyond. 2. Step up IT security and preparedness in the event of cyber security risks, which have become prevalent in the growing digitiza- 4. Enable enterprise customers to make data-driven decisions in real time under a secure and robust cloud environment. tion of business operations and consumer user habits. 5. Increase operating income, build sustainable operations, and promote the interests of shareholders. Strengthen social respon- 3. Observe the China-US trade war impacts and follow all local regulations including the US Trade Act 301. Continue to monitor socioeconomic situations, and dynamically adjust regional business strategies according to local developments. sibilities of the company and for employees. 4. Closely observe the currency fluctuation of emerging markets and remain watchful over the global financial market dynamics, in addition to foreign exchange hedging to minimize related risks. 1.2.3 Business Planning and Marketing Strategy 5. Keep abreast with the evolving digital infrastructure developments brought about by the combination of AI and 5G, and the new applications, opportunities and challenges this brings across industries. 1. Expand beyond gaming hardware and events to the esports community. Create a comprehensive gaming ecosystem with a portfolio of PCs, peripherals, gadgets for hardcore to casual gamers. Engage with world-class e-sports events as well as host own events of regional scale promoting the gaming brands. Provide a next-generation platform for the gaming community to build their team, train, and compete together. 2. Be first-to-market with new technologies and underscore the uniqueness of the new brand for the creator segment. Develop leading and world-firsts in design innovations, such as the world's thinnest and lightest notebooks, world's first curved screen gaming laptop, as examples. 3. Through both in-house research and partnerships, explore and expand to different verticals where there is synergy with our core competencies. 4. Focus efforts on optimizing key products and accelerating the development of innovative services for the enterprise segment. 5. Enhance corporate social responsibility, create value, and pursue sustainable operations in collaboration with the supply chain and customers. Expand employee social responsibility campaigns globally. 1.2.4 Future Development Strategy 1. Develop technologies for creators, gamers, and solutions with artificial intelligence (AI). 2. Expand the gaming segment to social platforms and with new gadgets and technology innovations like the metal-blade Aero- Blade 3D fans that help PCs stay cool, as well as incorporating latest industry technology to deliver best-in-class user experi- ences. 3. Seek opportunities in the commercial market, providing products and solutions to meet the rigid demands from different markets; the commercial business portfolio includes the new creator brand of PCs and monitors, Chromebooks, servers, and cloud solutions. 4. Continue with the dual transformation of existing PC business and new areas. Transform from a PC-oriented company to a sustainable technology group through new developments in areas such as social platforms, AI and the cloud. 5. Uphold corporate social responsibilities, realize a sustainable business mindset, and give back to society and shareholders. Promote personal social responsibilities through company-wide initiatives. 8 9


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    Acer Incorporated 2019 Annual Report Comp a ny In Ge ne ra l 2.1 Date of Founding : August 1, 1976 2.2 Brief Account of the Company 1980 1976 – 1986 • Designed the Dragon Computer Terminal, the Chinese lan- • Commercialized microprocessor technology guage adaptation for computers. 2 1987 – 2000 1981 • Created the Acer brand name and went global • Established its manufacturing operations at the Hsinchu Science-based Industrial Park in Taiwan. 2001 – 2007 • Debuted the MicroProfessor-I as the Company's first branded product. • Transformed from manufacturing to a marketing and sales company 1982 2008 – 2013 • Unveiled the MicroProfessor-II as Taiwan's first 8-bit home Company In • Enhanced worldwide presence with a multi-brand strategy computer. General 2014 – Beyond 1984 • First company to promote 16-bit PC products in Taiwan. • Transforming into a “hardware + software + services” company 1984 • Established Acer Peripherals, Inc. (now BenQ Corp.) . 1976 • Founded under the name “Multitech” with NT$1 million (US$25,000) in capital, focusing on trade, product design, 1985 and consultancy in the use of microprocessor technologies. • Founded AcerLand, Taiwan's first and largest franchised (Aug. 1, 1976). computer retail chain. 1978 1986 • Established the Microprocessor Training Centre, training • Beat IBM to offer 32-bit PCs. 3,000 engineers for Taiwan's information industry. 1987 1979 • Created the “Acer” name. • Expanded the business to central and southern Taiwan. • Designed Taiwan's first mass-produced computer for ex- port. 10 11


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    Acer Incorporated 2019 Annual Report Comp a ny In Ge ne ra l 1988 2002 2010 2015 • Completed Acer Inc. initial public offering (April 1988) • Inaugurated the Product Value Labs to enhance Acer's cus- • Provided and managed computing facilities for the Van- • As sponsor of Taiwan's First IAAF certified marathon – Wan tomer-centric focus in research and design. couver 2010 Olympic Winter Games. Jin Shi – Acer's BYOC™ provided runner tracking service. • TravelMate C100 was the first convertible Tablet PC avail- • Integrated Founder Tech's PC sales team and channels in • Held its inaugural "next@acer" global press conference in 1989 able in the worldwide market with pen input. the China market. New York. • Formed the TI-Acer DRAM joint venture with Texas Instru- • Announced the availability of the Predator gaming product ments. line. 2004 2011 • Acquired GPS cycling computer brand, Xplova, to expand • Acer Co-founder Stan Shih retired from the Group. • Acquired US-based iGware for investment in cloud tech- 1990 reach in the sports industry. nology. • Launched Acer's first notebook. • Debuted the first Ultrabook™ with the Aspire S3. 2005 • Acquired Altos Computer Systems, a manufacturer of • Jim Wong assumed to role of Corporate President 2016 multi-user and networked systems for commercial mar- • J.T. Wang assumed the position of Chairman and CEO, while • Announced strategic partnership with GrandPad to tap kets. Gianfranco Lanci stepped into the role of Corporate Presi- • Launched the ICONIA tablet PCs. into the senior care market. dent. • Began research and developments into the virtual reality • Launched Ferrari 4000, the first carbon-fiber notebook 1991 2012 realm. available in the worldwide market. • Introduced ChipUpTM technology – world's first 386-to-486 • Supplied all computing equipment for the London 2012 • Revealed the world's first curved-screen gaming notebook, • Became the No. 1 brand in EMEA and Western Europe for single-chip CPU upgrade solution. Olympic Games and earned high appraisals from the as- the Predator 21 X. notebooks. sembly. • Acquired Pawbo and stepped into the petware market. 1992 • Celebrated its 40th anniversary. 2006 2013 • Co-founder Stan Shih introduced the Smiling Curve con- • Became a Sponsor of Scuderia Ferrari. cept. • Elected Stan Shih as company Chairman and interim Cor- 2017 porate President. • Unveiled smart transportation solutions that include smart 2007 • Announced Build Your Own Cloud (BYOC™) and the transi- 1995 parking, and the intelligent mixology robot solution. tion to a “hardware + software + services” company. • Completed the merger of Gateway, Inc. • The popular Aspire multimedia PC brought Acer closer to • The Board appointed Jason Chen as Chairman and CEO, the consumer electronics market. and Meggy Chen as Corporate Chief Financial Officer. 2014 2008 • Sponsored 13,000 smartwatches to athletes and sports • Appointed Jason Chen as Corporate President and CEO delegation members participating in the Summer Uni- 1998 • Announced the acquisition of E-ten and plan to enter the (Jan. 1, 2014). versiade Taiwan, together with MediaTek Inc. and EasyCard smart handheld market. • As official IT Sponsor of the 13th Asian Games in Bangkok, Corp. • Invested 7 million shares in PChome Group's third-party Acer introduced the world's first PC-based management • Acquired Packard Bell Inc. through the takeover of Gateway payment business. • Expanded its digital signage business by participating in system for a major international sporting event. Inc. the private placement of AOPEN. • Debuted the Liquid Leap as the company's first wearable • Launched the Aspire One, Acer's first netbook. device. • The Board approved to separate the data center from Acer 2000 • George Huang succeeded Stan Shih as Chairman; Acer's Cyber Security Inc. and form a new company called Acer e- 2009 Enabling Data Center Inc. • As part of its second re-engineering to transform into a Board invited Stan Shih to become Honorary Chairman. marketing and sales company, Acer split off the manufac- • Launched the Aspire Timeline notebooks – thin and light • Debuted on Dow Jones Sustainability Emerging Markets turing business unit to create Wistron Corp. with all-day battery life. Index and listed on MSCI Global Sustainability Indexes for environmental, social and governance. • BusinessWeek named Acer among the “10 Hottest Tech 2001 Companies of 2009.” • Introduced the MegaMicro e-Enabling services, an e-busi- • Launched the Liquid line of smartphones. ness model that integrates IT equipment, network, man- • Ranked as the world No. 2 company in Total PCs. agement platforms, and application software. 12 13


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 2018 • Forged a cross-industry cooperation with Novartis Taiwan, focusing on artificial intelligence technology and smart • Launched the world's thinnest laptop, Swift 7, measuring at medical products. just 8.98 mm thin. • Its subsidiary Acer Cyber Security Inc. (ACSI) became listed • Hosted the first APAC Predator League 2018 tournament on the Taipei Exchange. and finals held in Jakarta, Indonesia. • Its subsidiary, Acer Synergy Tech Corp. (AST), became listed • Expanded its gaming gadgets with the Predator Thronos on the emerging market of the Taipei Exchange. chair. • Announced the world's lightest 15-inch notebook with the Swift 5 weighing just 990 grams. 2020 • Introduced the Acer OJO 500 Windows Mixed Reality head- • Its subsidiary, Weblink International, became listed on the 3 set. emerging market of the Taipei Exchange. • Named Proud Partner and Official Monitor Provider of the 2018 League of Legends World Championship, for the third consecutive year. • Appointed Tiffany Huang and Jerry Kao as Co-chief Oper- ating Officers to directly support the Chairman and CEO in the delegation of corporate direction and strategy to en- hance company operations. 2019 Corporate • Hosted the grand finals of the second Asia Pacific Predator League tournament in Thailand, which started in Q3 2018 with a total of 3,530 teams' participation. Governance • Launched the ConceptD brand with a full portfolio of high- end products for professional and amateur creators, in- Report cluding desktops, notebooks, and monitors. • As Official Sponsor of the 2019 Olympiad in Informatics in Azerbaijan, Acer provided servers to run the contest, and notebooks for the contestants and staff. • Predator was the first gaming brand to win the Red Dot brand award. • Unveiled Planet9, a next-generation esports platform and open community for gamers. • Listed on the Dow Jones Sustainability Indices for sixth straight year; and on the FTSE4Good Emerging Index for the fourth year. • The “Click to Pray eRosary” smart wearable, designed by its subsidiary GadgeTek Inc. in corporation with the Vatican for the Catholic community, captured great international media attention. 14 15


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.1 Organization of the Company 3.1.2 Corporate Functions 3.1.1 Department Functions Auditing e- Business • To assist Acer Board of Directors and officers in inspecting • End-to-end ICT solutions and services provider, includ- and reviewing defects in the internal control systems as ing mobile application and enterprise software systems well as measuring operational effectiveness and efficien- development, systems integration and operation services, cy, and make timely recommendations for improvements value-added and vertical business solutions Shareholders' Meeting to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction. BYOC Smart Products Business • BYOC (Build Your Own Cloud) services empower global Corporate Governance business development and management through cloud- • The procedures for and relative matters of Shareholders, connected devices and AIoT solutions. AIoT solutions Board of Directors and functional committees' meeting; including Smart Signage, Smart Video Conference and Board of Directors to assist Acer Board of Directors and BOD members to Smart Senior Care, all of the applications are based on AI Auditing execute their power and authority in accordance with laws Chairman applications as SaaS, device management platform as and regulations, the Company's Articles of Incorporation PaaS, and connects to an AI framework with AI engines of and relevant internal rules. each device. Combined together as a complete end to end Remuneration Investmen t Audit Corporate solution. Committee Co mmittee Committee Governance Corp. Sustainability Office • Strategic planning and management in corporate sustain- Corporate Marketing, Business Planning & ability with the aim of fulfilling corporate social responsi- Operations Corp. Sustainability bilities Office • Corporate brand management, consolidation and imple- mentation of global marketing strategies, corporate com- munications, and the strategic planning, operations of all Global Projects IT business back-end function CEO • Global key project planning and execution Value Lab PAP RO • Research and development, design and devote to the • Sales, marketing and after-sales service of Acer's IT prod- technology for new value creation business Global Projects ucts in Taiwan and Asia Pacific Global IT EMEA RO • Corporate information infrastructure and information • Sales, marketing and after-sales service of Acer's IT prod- systems management Co-COO Co-COO ucts in Europe, Middle East and Africa Global Finance Corp. PA RO • Corporate finance, investment, treasury, credit and risk Marketing, Global • Sales, marketing and after-sales service of Acer's IT prod- PAP RO IT Products e-Business Global HR control and accounting services management Biz Planning Finance ucts in Pan America & Operations Global Legal China RO • Corporate legal affairs, and intellectual property manage- Digital General • Sales, marketing and after-sales service of Acer's IT prod- ment EMEA RO Global IT Value Lab Global Legal Display Affairs ucts in China Global HR IT Products Business • In response to market changes of global trends, formalize BYOC • Managing global notebook, desktops, Tablet, wearable the human resources-related talent strategies and orga- PA RO Smart products and gadget products business nizational planning to meet the company's sustainable Products development needs Digital Display Business • Managing global monitors, and projectors product lines General Affairs China RO business • General affairs, transportation services, office facilities management 16 17


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.2 Information Regarding Board of Directors and Key Managers 3.2.1 Board of Directors (April 14, 2020) Shares Held by Spouse Shares Held by the Spouse or Immediate Family Nationality Date of First Shares Held When Elected Shares Held at Present & Minors Other's Holding Managerial Position Date of Accumulative Title or Name Gender Term Election Education Current Position(s) in Other Companies Election Term Relation- Registration (Note 1) Number Percentage Number Percentage Number Percentage Number Percentage Title Name ship Senior Vice President of Worldwide Sales and Marketing, TSMC 1. Chairman, Mu-Jin Investment Co., Ltd. Chairman 3 R.O.C Jason Chen Male 06/21/2017 Since June 2014 06/18/2014 2,555,480 0.08 2,633,480 0.09 0 0 2,264,056 0.07 2. Chairman, Mu-Shi Investment Co.,Ltd. - - - (Note 1) Years MS in Business 3. Other(Note 4) Administration, Missouri Columbia University 1. Independent Director, Taiwan Semiconductor Manufacturing Co., Ltd. 2. Director, Nan Shan Life Insurance Co., ltd. Legal 3. Director, Hung Rouan Investment Corp. Representative Maverick 4. Director, Egis Technology Inc. Son of Director Shih 5. Director, iD Innovation Inc. (Note 2) 6. Chairman, Dragon Investment Co., Ltd. Chairman, ACER 7. Director, CTS Inc. 3 8. Director, Rongxin Management Consultants Director R.O.C Stan Shih Male 06/21/2017 Since July 1979 12/17/2001 69,024,395 2.24 34,989,531 1.14 399,225 0.01 0 0 MS in Electrical Years Engineering, National Chiao Co., Ltd. Tung University 9. Director, Bingyu Co., Ltd. 10. Chairman, Ambi Investment and Consulting Legal Inc. Representative Carolyn 11. Chairman, StanShih Foundation Wife of Director Yeh 12. Chairman, Acer Foundation 13. Chairman, CLOUD GATE Foundation (Note 2) 14. Director, NSFG Foundation 15. Director, Chew's Culture Foundation Director, ACER 1. Independent Director, PChome Online Inc. July 1979 ~ Bachelor, Institute 2. Independent Director, BIONET Corp. 3 Feburary 1993 Director R.O.C George Huang Male 06/21/2017 06/14/2005 8,767,642 0.29 8,267,642 0.27 1,602,819 0.05 0 0 of Communication 3. Director, Motech Industries Inc. - - - Years Since June 2014 Engineering of National 4. Supervisor, Les Enphants Co., Ltd. Chiao Tung University 5. Supervisor, Apacer Technology Inc. Hung Rouan 3 Director R.O.C - 06/21/2017 Since June 2005 06/14/2005 73,629,933 2.39 73,629,933 2.39 0 0 0 0 - - - - - Investment Corp. Years 1. Chairman, MAVs LAB. Inc. Stan Maverick Shih President, Acer Cloud 2. Director, Rongxin Management Consultants Director Father Legal Shih (Representative Technology Co., Ltd. Representative 3 Since July R.O.C of Hung Rouan Male 06/21/2017 06/14/2005 0 0 10,141,777 0.33 13,172,880 0.43 0 0 Ph.D. in Electrical 3. Director, Dragon Investment Co., Ltd. Legal of Director Years 2019 Investment Engineering, University of 4. Director, Kiwi Technology Inc. Representative Carolyn (Note 2) Mother Corp.) Southern California 5. Supervisor, Allxon Inc. of Director Yeh 6. Other (Note 4) (Note 2) Smart Capital 3 Director R.O.C - 06/21/2017 Since June 2005 06/14/2005 12,228 0 12,228 0 0 0 0 0 - - - - - Corp. Years 1. Independent Director, AU Optronics Corp. 2. Independent Director, Apacer Technology Inc. 3. Director, Aopen Inc. Philip Peng CFO, ACER Legal 4. Director, Wistron Information & Services (Representative 3 Representative R.O.C Male 06/21/2017 Since June 2005 06/14/2005 0 0 1,319,469 0.04 258,007 0.01 0 0 MBA, National Chengchi Corp. - - - of Smart Capital Years of Director University 5. Director, Wistron NeWeb Corporation Corp.) 6. Director, Wistron ITS Corporation. 7. Director and President, iDSoftcapotal Inc. 8. Chairman, Smart Capital Corp. 1. Director, TSMC 2. Chairman, TSMC China Company Ltd. Deputy CEO, TSMC 3. Chairman, Global Unichip Corp. Independent 3 R.O.C F.C. Tseng Male 06/21/2017 Since June 2011 06/15/2011 0 0 0 0 0 0 0 0 Ph.D, National Cheng Kung 4. Vice Chairman, Vanguard International Semi- - - - Director Years University conductor Corp. 5. Chairman, TSMC Education and Culture Foundation 18 19


  • Page 16

    Acer Incorporated 2019 Annual Report Corporate Governance Report Shares Held by Spouse Shares Held by the Spouse or Immediate Family Nationality Date of First Shares Held When Elected Shares Held at Present & Minors Other's Holding Managerial Position Date of Accumulative Title or Name Gender Term Election Education Current Position(s) in Other Companies Election Term Relation- Registration (Note 1) Number Percentage Number Percentage Number Percentage Number Percentage Title Name ship Professor of International Business, College of 1. Independent Director, Delta Electronics, Inc. Management, National 2. Independent Director, E.Sun Financial Hold- Independent 3 Taiwan University ings Co., Ltd. R.O.C Ji-Ren Lee Male 06/21/2017 Since June 2014 06/18/2014 0 0 0 0 0 0 0 0 - - - Director Years Ph.D. in Strategic 3. Independent Director, Vivotek Inc. Management, University 4. Member of Remuneration Committee, Media of Illinois at Urban- Tek Inc. Champaign Chairman, Research 1. Chairman, eMemory Technology Inc. Institute of Electronics 2. Chairman, iMQ Technology Inc. Engineering, Tsing-Hua 3. Director, Powerflash Technology Corp. University 4. Independent Director and Member of Re- Independent Ching-Hsiang 3 muneration Committee, Materials Analysis R.O.C Male 06/21/2017 Since June 2017 06/21/2017 0 0 0 0 0 0 0 0 Ph.D. in Electrical - - - Director Hsu Years Technology Inc. Engineering, University of Illinois at Urban- 5. Director, National Applied Research Labo- Champaign ratories 6. Director, SecuX Technology Inc. 7. Chairman and President, PUFsecurity Corp. Stan Carolyn Yeh Chief Administrative Officer Director Husband Legal Shih (Representative of Acer Co. Ltd. Representative 3 0 Legal R.O.C of Hung Rouan Female 06/21/2017 Since June 2014 06/14/2005 0 0 0 0 0 0 0 Bachelor, Department of (Note 2) of Director Years (Note 2) Representative Maverick Investment Business Administration of Son (Note 2) of Director Shih Corp.) Fu Jen Catholic University (Note 2) Premier Independent San-Cheng 3 0 Director R.O.C Male 06/21/2017 Since June 2017 06/21/2017 0 0 0 0 0 0 0 Ph.D. in Civil and (Note 3) - - - Chang Years (Note 3) Environmental Engineering, (Note 3) Cornell Note 1: The Company continuously focus on Dual Transformation, which means Acer not only discovers a Niche Market to its core business, but also develops multiple growth engines; to efficiently exercise the limited resource of Acer group, and achieve this challenging and complicated strategy of Dual Transformation, it is periodically necessary for one person to hold a concurrent post of Chairman and CEO. Moreover, to enhance the supervising function to Board, the Company increases the number of Independent Directors to 4 seats, in addition there is no more than half directors hold a concurrent post of employees and executors of the Company; besides, it is estimated that the majority of the Board members are independent directors after the 2020 Board re-election. Note 2: The Board of Director, Hung Rouan Investment Corp., re-appointed Maverick Shih to be its representative on 2019.07.26, original its rep- resentative, Carolyn Yeh was dismissed on the same day. The number of shares will be “0” for the board of director dismissed or resigned. Note 3: San-Cheng Chang resigned on 2019.11.15. the number of shares will be “0” for the board of director dismissed or resigned. Note 4: Appointed by Company to be Director and/or President of Acer subsidiaries: please refer to pages 144 to 153. Note 5: The Date that the Director was first elected when Acer has been a public offering Company. Major Shareholders of Acer's Institutional Shareholders (April 14, 2020) Name of Acer's Institutional Major Shareholders of Acer's Institutional Percentage of Shares Shareholders Shareholders Carolyn Yeh 20.13% StanShih Foundation 1.60% Shih Hsuen Rouan 17.25% Hung Rouan Investment Corp. Shih Hsuen Huei 26.09% Shih Hsuen Lin 17.16% Shih Fang Cheng 8.93% Yeh Ting Yu 8.84% Philip Peng 56.25% Smart Capital Corp. Fan Peng 43.75% Note: StanShih Foundation is established and 100% donated by Mr. Stan Shih. 20 21


  • Page 17

    Acer Incorporated 2019 Annual Report Corporate Governance Report Board of Directors (BOD) Diversity Policy Acer Group constantly pay attention to corporate governance, needs be formulated and include, without being limited to, the The specific management objectives of the BOD Diversity 5. Director having the professional financial background in our BOD Diversity Policy is included into Chapter III Enhancing following two general standards: Policy business and investment: Philip Peng the Function of Board of Directors of “Acer Incorporated Cor- 6. Director specializing in semiconductor industry and de- 1. Basic requirements and values: Gender, age, nationality, This Policy may make the Board function be more effective. porate Governance Best-Practice Principles”. voted in education, public and social activities: F.C. Tseng and culture. The nomination and selection of board members of the Com- The board of directors of the Company shall direct company pany is in accordance with the Company's Articles. In addi- 7. Director specializing in strategic organization and busi- 2. Professional knowledge and skills: A professional back- strategies, supervise the management, and be responsible to tion, there is nomination system to ensure the diversity and ness management: Ji-Ren Lee ground (e.g., law, accounting, industry, finance, marketing, the shareholders meetings. Procedures and arrangement re- independence of the board members. The Company expects 8. Director specializing in semiconductor industry and hav- and technology), professional skills, and industry experi- lating to corporate governance shall ensure that, in exercis- to invite and nominate one or more female candidates in the ing outstanding contribution on the R&D to non-volatile ence. ing its authority, the board of directors will comply with laws, next board election (will be held in 2020), and to select direc- semiconductor component: Ching- Hsiang Hsu regulations, articles of incorporation, and the resolutions of All members of the board shall have the necessary knowledge, tors with different professional knowledge, for providing dif- shareholders meetings of the Company. skill, and experience to perform their duties. To achieve the ferent perspectives and contributions to facilitate the Board ideal goal of corporate governance, the board of directors function. Regarding the structure of the board of directors, the Com- shall possess the following abilities: The implement of the BOD Diversity Policy: pany shall determine an appropriate number of board mem- bers not less than five persons, in consideration of its business 1. Ability to make operational judgment. 1. Director specializing in operation and sales of Global scale, the shareholding of its major shareholders and practical 2. Ability to perform accounting and financial analysis. brand products and services: Jason Chen operational needs. 3. Ability to conduct management administration. 2. Director who be devoted in innovation, public and social 4. Ability to conduct crisis management. services: Stan Shih The composition of the board of directors shall be determined by taking diversity into consideration. It is advisable that di- 5. Industrial knowledge. 3. Director specializing in E-commerce and having success- rectors concurrently serving as company officers not exceed fully promoted the business's transformation: George 6. International market perspective. one-third of the total number of the board members, and that Huang 7. Ability to lead. an appropriate policy on diversity based on the Company's 4. Director specializing in cloud and IC design: Maverick Shih 8. Ability to make decisions. business operations, operating dynamics, and development The backgrounds of current Directors: Nationality Age NPO Social / Name Gender or Classification Above Marketing E-commerce Cloud Semiconductor IC design Entrepreneur Transformation Investment Accounting Academia 40~50 50~60 Experience Culture Registration 60 Jason Non- M R.O.C 4 4 4 4 Chen independent Non- Stan Shih M R.O.C 4 4 4 4 4 4 independent George Non- M R.O.C 4 4 4 4 4 Huang independent Maverick Non- M R.O.C 4 4 4 Shih independent Philip Non- M R.O.C 4 4 4 Peng independent F.C. Tseng M R.O.C Independent 4 4 4 4 Ji-Ren Lee M R.O.C Independent 4 4 4 4 Ching- Hsiang M R.O.C Independent 4 4 4 4 4 Hsu 22 23


  • Page 18

    Acer Incorporated 2019 Annual Report Corporate Governance Report Professional qualifications and independence analysis of directors and super- visors (April 14, 2020) Criteria Meet One of the Following Professional Qualification Requirements, Together with at Number of Other Independence Criteria (Note 1) Least Five Years Work Experience Public Companies in Which the An Instructor or Higher Position in a A Judge, Public Prosecutor, Attorney, Certified Have Work Experience in Department of Commerce, Law, Finance, Public Accountant, or Other Professional or the Areas of Commerce, Individual is Accounting, or Other Academic Department Technical Specialist Who has Passed a National Law, Finance, or Concurrently Related to the Business Needs of the Company Examination and been Awarded a Certificate in Accounting, or Otherwise 1 2 3 4 5 6 7 8 9 10 11 12 Serving as an in a Public or Private Junior College, College or a Profession Necessary for the Business of the Necessary for the Business Independent Name University Company of the Company Director Jason Chen 4 4 4 4 4 4 4 4 4 4 0 Stan Shih 4 4 4 4 4 4 4 1 George Huang 4 4 4 4 4 4 4 4 4 4 4 2 Hung Rouan Investment Corp. Not applicable. Not applicable. Maverick Shih (Representative of Hung Rouan Investment 4 4 4 4 4 4 0 Corp.) (Note 2) Carolyn Yeh(Representative of Hung Rouan Investment Corp.) 4 4 4 4 4 4 4 0 (Note 3) Smart Capital Corp. Not applicable. Not applicable. Philip Peng (Representative of Smart 4 4 4 4 4 4 4 4 4 4 4 2 Capital Corp.) F.C. Tseng 4 4 4 4 4 4 4 4 4 4 4 4 4 0 Ji-Ren Lee 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 San-Cheng Chang (Note 3) 4 4 4 4 4 4 4 4 4 4 4 4 4 0 Ching-Hsiang Hsu 4 4 4 4 4 4 4 4 4 4 4 4 4 1 Note 1 : Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office. (1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs. (5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings. (6) Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. (7) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. (8) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. (9) Not been a person of any conditions defined in Article 30 of the Company Law. (10) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law. (11) Not been a person of any conditions defined in Article 30 of the Company Law. (12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law. Note2: The Board of Director, Hung Rouan Investment Corp., re-appointed Maverick Shih to be its representative on 2019.07.26, original its representative, Carolyn Yeh was dismissed on the same day.. Note3: Simon Chang has quit as the independent director of the Company on November 15, 2019. 24 25


  • Page 19

    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.2.2 Key Managers (April 14, 2020) Spouse or Immediate Family Shares Held by Spouse & Shares Held by the Nationality or Date of Shares Held Directly Current Position(s) in Other Holding Position as President or Title Name Gender Minors Other's Education Registration Accession Companies Vice President Number Percentage Number Percentage Number Percentage Title Name Relationship 1. Chairman, Mu-Jin Invest- Senior Vice President of Worldwide ment Co., Ltd. Chairman & CEO Sales and Marketing, TSMC R.O.C Jason Chen Male 01/01/2014 2,633,480 0.09 0 0 2,264,056 0.07 2. Chairman, Mu-Shi Invest- - - - (Note 1) MS in Business Administration, ment Co.,Ltd. Missouri Columbia University 3. Other (Note 4) AVP of Acer PCGO Supply Chain Operations; acting Operation Analysis Co-COO R.O.C Tiffany Huang Female 01/01/2013 500,817 0.02 90 0 0 0 Officer of Corp. President Office (Note 4) - - - Bachelor, Department of law of National Chung Hsing University AVP of Acer Note Book Business Group Co-COO R.O.C Jerry Kao Male 12/01/2014 489,375 0.02 0 0 0 0 (Note 4) - - - MBA, National Chung Hsing University VP, Acer EMEA, Packard Bell Division Corp.VP & Emmanuel France Male 01/01/2011 470,000 0.02 0 0 0 0 MBA, University of Southern California (Note 4) - - - President Fromont (USC) Chairman & CEO of ARC Consulting President R.O.C Ben Wan Male 05/16/2002 247,388 0.01 0 0 0 0 Company (Note 4) - - - MBA, University of Southern California American East Director, Texas Gregg Instruments President USA Male 09/01/2015 383,000 0.01 0 0 0 0 (Note 4) - - - Prendergast Business Bachelor, Temple University Vice General Manager, Lite-On Technology Corporation President R.O.C Andrew Hou Male 03/25/2016 255,500 0.01 19 0 0 0 (Note 4) - - - Computer Science Master, Syracuse University Associate General Manager, Zenitron Corporation President R.O.C Victor Chien Male 03/25/2016 212,506 0.01 11 0 0 0 Control Engineering and Management (Note 4) - - - Science Bachelor, National Chiao Tung University Department of Computer Science Professor, National Chiao Tung CTO R.O.C RC Chang Male 09/01/2015 273,135 0.01 0 0 0 0 University (Note 4) - - - PhD, Computer engineering National Chiao Tung University Corp. General Counsel of Acer Global Legal Governance R.O.C Lydia Wu Female 05/08/2019 190,903 0.01 0 0 0 0 Bachelor, Department of law of (Note 4) - - - Officer (Note 2) National Chung Hsing University AVP of Acer Global Treasury Corp. CFO R.O.C Meggy Chen Female 07/01/2017 317,265 0.01 0 0 0 0 MBA, UCLA Anderson School of (Note 4) - - - Management Accounting CFO of Acer Pan Asia Pacific Region R.O.C Sophia Chen Female 07/01/2017 12,680 0 0 0 0 0 (Note 4) - - - Officer MBA, University of Pittsburgh President, Acer Cloud Technology President 0 Business R.O.C Maverick Shih Male 01/24/2014 0 0 0 0 0 (Note 3) - - - (Note 3) (Note 3) Ph.D. in Electrical Engineering, University of Southern California Note 1: The Company continuously focus on Dual Transformation, which means Acer not only discovers a Niche Market to its core employees and executors of the Company; besides, it is estimated that the majority of the Board members are indepen- business, but also develops multiple growth engines; to efficiently exercise the limited resource of Acer group, and achieve dent directors after the 2020 Board re-election. this challenging and complicated strategy of Dual Transformation, it is periodically necessary for one person to hold a Note 2: Lydia Wu assumed position on 2019.05.08. concurrent post of Chairman and CEO. Moreover, to enhance the supervising function to Board, the Company increases Note 3: Maverick Shih released on 2019.08.01. the number of Independent Directors to 4 seats, in addition there is no more than half directors hold a concurrent post of Note 4: Appointed by Company to be Director and/or President of Acer subsidiaries: please refer to pages 144 to 153. 26 27


  • Page 20

    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.2.3 Remuneration of Directors, President, and Vice Presidents 3.2.3.1 Remuneration of Directors Unit: NT$ thousands Remuneration Ratio of Total Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total Remuneration Compensation Reward of Business execution (A+B+C+D) to Net Salary, Bonuses, and (A+B+C+D+E+F+G) to Compensation Base Compensation (A) Severance Pay (B) Severance Pay (F) Employee Compensation (G) Directors (C) expenses (D) Income (%) Allowances (E) Net Income (%) Paid to Directors from Title Companies an Invested Name (Note 1) Companies Companies Companies Companies Companies Companies Companies in the Companies Company in the in the in the in the in the in the in the The company consolidated in the Other than The The The The The company consolidated The company consolidated The company consolidated The company consolidated consolidated consolidated consolidated financial consolidated the Company's company company company company financial financial financial financial financial financial financial statements financial Subsidiary statements statements statements statements statements statements statements statements Cash Stock Cash Stock Chairman Jason Chen Director Stan Shih Director George Huang Hung Rouan Investment Corp.(Representative: 3,000 3,000 0 0 5,697 5,697 600 600 0.35% 0.35% 20,935 103,097 319 319 0 0 0 0 1.16% 4.28% None Director Maverick Shih , Carolyn Yeh, (Note 2) Smart Capital Corp. Director (Representative: Philip Peng) Independent F.C. Tseng Director Independent Ji-Ren Lee Director 12,000 12,000 0 0 0 0 780 780 0.49% 0.49% 0 0 0 0 0 0 0 0 0.49% 0.49% None Independent San-Cheng Chang Director (Note 3) Independent Ching-Hsiang Hsu Director Note 1: In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recent year to compensate directors for their services, such as being independent consultant. Note 2: The representative of Hung Rouan Investment was changed from Carolyn Yeh to Maverick Shih on July 26, 2019. Note 3: San-Cheng Chang was resigned on November 15, 2019. 28 29


  • Page 21

    Acer Incorporated 2019 Annual Report Corporate Governance Report Name of Directors Range of Remuneration Total of (A+B+C+D) Total of (A+B+C+D+E+F+G) The company Companies in the consolidated financial statements The company Companies in the consolidated financial statements Under NT$ 1,000,000 Stan Shih, Jason Chen Stan Shih, Jason Chen NT$1,000,000 ~ Under NT$2,000,000 Hung Rouan Investment Corp., Smart Hung Rouan Investment Corp., Smart Hung Rouan Investment Corp., Smart Hung Rouan Investment Corp., Smart NT$2,000,000 ~ Under Capital Corp., George Huang, F.C. Tseng, Ji- Capital Corp., George Huang, F.C. Tseng, Ji- Capital Corp., George Huang, F.C. Tseng, Ji- Capital Corp., George Huang, F.C. Tseng, Ji- NT$3,500,000 Ren Lee, San-Cheng Chang, Ching-Hsiang Ren Lee, San-Cheng Chang, Ching-Hsiang Ren Lee, San-Cheng Chang, Ching-Hsiang Ren Lee, San-Cheng Chang, Ching-Hsiang Hsu Hsu Hsu Hsu NT$3,500,000 ~ Under Jason Chen NT$5,000,000 NT$5,000,000 ~ Under Hung Rouan Investment Corp. Hung Rouan Investment Corp. NT$10,000,000 Representative Maverick Shih Representative Maverick Shih NT$10,000,000 ~ Under NT$15,000,000 NT$15,000,000 ~ Under Stan Shih Stan Shih NT$30,000,000 NT$30,000,000 ~ Under NT$50,000,000 NT$50,000,000 ~ Under Jason Chen NT$100,000,000 NT$100,000,000 & above Total 9 9 9 9 3.2.3.2 Remuneration of Supervisors Not Applicable 30 31


  • Page 22

    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.2.3.3 Remuneration of the President and Vice Presidents Unit: NT$ thousands Ratio of total compensation Salary(A) Severance Pay (B) Bonuses and Allowances (C) Employee Compensation (D) Compensation Paid (A+B+C+D) to net income (%) to the President Companies in the consolidated and Vice Presidents Companies Companies Companies The company Title Name financial statements Companies in from an Invested in the con in the con in the con the consolidated Company Other The company solidated The company solidated The company solidated The company financial than the Company's financial financial financial Cash Stock Cash Stock statements Subsidiary statements statements statements Chairman & CEO Jason Chen Co-COO Tiffany Huang Co-COO Jerry Kao Emmanuel Corp. VP & President Fromont President Ben Wan Gregg President Prendergast President Andrew Hou 58,755 120,910 3,764 8,382 83,698 211,949 0 0 0 0 5.55% 12.96% None President Victor Chien CTO RC Chang Corporate Governance Lydia Wu (Note 1) Office Corp. CFO Meggy Chen Accounting Officer Sophia YL Chen Maverick Shih President (Note 2) Note 1: Lydia Wu was appointed on May 8th, 2019. Note 2: Maverick Shih resigned on August 1st, 2019. Note 3: The above salary includes the estimated amount of the unpaid leave, bonus, special fee and the salary part which is recognized by the “share-based payment” Name of President and Vice Presidents Range of Remuneration The company Companies in the consolidated The distribution of Profit Sharing as employee's compensation to President and Under NT$ 1,000,000 Emmanuel Fromont, Gregg Vice Presidents: None Prendergast NT$1,000,000 ~ Under NT$2,000,000 NT$2,000,000 ~ Under NT$3,500,000 NT$3,500,000 ~ Under NT$5,000,000 Jason Chen, Maverick Shih Maverick Shih NT$5,000,000 ~ Under NT$10,000,000 Lydia Wu, Sophia YL Chen Lydia Wu, Sophia YL Chen NT$10,000,000 ~ Under NT$15,000,000 Ben Wan, RC Chang, Meggy Chen Ben Wan, RC Chang, Meggy Chen Tiffany Huang, Jerry Kao, Andrew Tiffany Huang, Jerry Kao, Andrew NT$15,000,000 ~ Under NT$30,000,000 Hou, Victor Chien Hou, Victor Chien NT$30,000,000 ~ Under NT$50,000,000 Gregg Prendergast NT$50,000,000 ~ Under NT$100,000,000 Jason Chen, Emmanuel Fromont NT$100,000,000 & above Total 13 13 32 33


  • Page 23

    Acer Incorporated 2019 Annual Report Corporate Governance Report 2. Remuneration setting procedures 3.2.3.4 Compare and explain the company'sand all compa- According to the first paragraph of Article 16-1 of the Company'sArticles of Incorporation, , when the company makes any profit nies in the consolidated statement in the past two that year, the profit less an amount reserved to make up for the accumulative losses and no more than 0.8% of that balance is years of the total amount of remuneration of the allocated to the directors as the reward. The method of allocation is submitted by the Remuneration Committee to the board of directors to decide. company'sdirectors, supervisors, general managers and deputy general managers as the percentage of 3. The relevance of the business performance and the future risks the net profit after tax and after having explained the The directors' remuneration is stipulated in the company's Articles of Incorporation, and the non-fixed remnumeration part is based on the company's annual profitability and is directly related to the company's operating performance. In addition, policies, standards, combination of remuneration; considering the directors' responsibilities, the company's operating performance and the standard of the peers in the same setting remuneration procedures; and the relevance industry, fixed remuneration is set to avoid the negligence in assessing the future risks resulting from pursuing short-term op- eration profits. The Remuneration Committee also regularly evaluates and reviews the remuneration of the Board of Directors of the business performance and the future risks. and reports the results to the Board for discussion to ensure it is balanced with the company's sustainable business operation. (1) The remuneration of the company's director as the percentage of the net profit after tax in the last two years: (2) The remuneration of the company's general manager and deputy general manager as 2018 2019 the percentage of the net profit after tax in the last two years: 2018 2019 Title (All companies in the (All companies in the (Company) (Company) 2018 2019 consolidated statement) consolidated statement) 2018 2019 Title (All companies in the (All companies in the (Company) (Company) Director 0.76% 0.76% 0.84% 0.84% consolidated statement) consolidated statement) Note: It does not include relevant remuneration to the director who holds a concurrent position as an employee. General Manager and Deputy 4.83% 11.38% 5.55% 12.96% General Manager 1. Policy, Standard and Combination of the Remuneration The directors' remuneration of the Company is based on the provisions of the Company's Articles of Incorporation; in accor- 1. Policy, Standard and Combination of the Remuneration dance with the directors' participation in the company's operations and the value of their contributions. The Remuneration The remuneration of the company to the manager is mainly divided into fixed salary, variable bonus and retire/severance pay; Committee refers to the standard of peers in the same industry and submits to the Board of Directors for resolution and issue fixed salary is the monthly salary agreed with the employee, and the variable bonus is further divided into short-term bonus and payment after passing the resolution, and reports to the shareholders during the annual meeting in accordance with the law. long-term bonus. The remuneration of the directors includes fixed remuneration, reward of directors, and business execution expenses (travel expenses included). When the company makes profit that year, the profit less an amount reserved to make up for the accumu- Short-term bonuses are awarded when the annual performance has reached the target and in accordance with the Article 20 of lative losses and no more than 0.8% of that balance is allocated to the directors as the reward. Regardless of fixed remunera- the Company'sArticles of Incorporation. The short-term bonus considers the performance and contribution in the current year. tion, business execution expenses and reward of directors, they are subject to the standards of the high-tech industry and The remuneration committee will consider the factors such as the responsibilities of the job, the overall market of the industry are submitted by the Remuneration Committee to the Board of Directors for resolution and issue payment after passing the and the market standard, report to the board of directors for approval. Upon approval, the annual bonus of the company will be resolution. released according to the times and date announced. In addition, according to the principle of remuneration paid by the company's remuneration committee and the board of The long-term bonus is for the period of three years or more, and the profit of the shareholders' investment in the company's directors, the director concurrently served as an employee would not be awarded with other director'sremuneration (i.e. fixed stock is used as the standard for issuing the bonus which connects with the interests of the shareholders. remuneration and reward of directors) except for the business execution expenses. The combination of Director'sremuneration is as follows: Fixed Salary 6% Business execution expense 35% Variable Bonus 62% Reward of directors 26% Fixed Remuneration 3% Retire/ 68% Severance Pay 34 35


  • Page 24

    Acer Incorporated 2019 Annual Report Corporate Governance Report 2. Remuneration setting procedures (2) In addition to the above (1) mentioned matters, the matters that any independent director objected or expressed reserva- The manager's remuneration is dealt in accordance with the company's Articles of Incorporation and the relevant provisions of tions which have been recorded or stated in a written statement. the company. The human resources unit submits the manager's remuneration to the remuneration committee. After reviewing and approving by the remuneration committee, it is submitted to the board of directors for verification. Objection or BOD Meeting Matters under Reservation by Date and Content of Motions and Follow-up (if any) Article 14-3 of any Independent Session the Taiwan SEA Director 3. The relevance of the business performance and the future risks Employees' remuneration is dealt in accordance with the regulations and the results of the year's business operations. The stan- To Approve the 2018 Financial Statements and Business Report V None dards, structure and system of, will be reviewed and adjusted at any time depending on the actual operating conditions and the To approve the Acer'sStatement of Internal Control System for changes in relevant regulations. The remuneration committee of the Company also regularly assesses the current status of the V None 2018 remuneration of the Manager and provides recommendations to the Board of directors for referencing and discussion to ensure the consideration of the overall remuneration. To Approve the Proposal for Profit & Loss Appropriation of V None 2018 To Approve the Appointment CPAs of KPMG as the Auditors of V None Acer Incorporated 3.3 Corporate Governance Status To Approve the Amendments to Acer's“Articles of Incorporation” V None 2019.03.20 First 2019 To Approve the Amendments of the Internal Rules V None 3.3.1 Meetings Held by the Board of Directors BOD Meeting To Convene the 2019 General Shareholders' Meeting V None The Board of Directors held four meetings from Jan. 1, 2019 to Dec. 31, 2019. To Approve the Company'sCorporate Guarantees V None The record of the Directors' attendances is shown below: To Adoption of the Company and Worldwide Subsidiaries' V None Lending of Capital to others No. of Meetings No. of Meetings Meeting Title Name Note Attended Attended by Proxy Attendance Rate(%) To Approve the Company's Corporate Guarantees V None Chairman Jason Chen 4 0 100% Director Stan Shih 4 0 100% To Approve the Company and Worldwide Subsidiaries' Loaning V None Funds to Others Director George Huang 4 0 100% Maverick Shih The Company'sresponse to Independent Director's Objection or Reservation: N/A Take office on Director (Representative of Hung 2 0 100% 2019.07.26 Resolution: Members of the Board Present Unanimously Approved Above Proposed Items. Rouan Investment Corp.) Carolyn Yeh Dismissed on To Approve the First Quarter of FY2019 Consolidated Financial Director (Representative of Hung 2 0 100% V None 2019.07.26 Statements Rouan Investment Corp.) Philip Peng To Approve the establishment and amendments of the Internal Director (Representative of Smart 4 0 100% V None Rules Capital Corp.) Independent To Propose the plan of shareholding diversification of F.C. Tseng 4 0 100% subsidiaries V None Director Independent Ji-Ren Lee 4 0 100% 2019.05.08 To Adjust and Simplify the Investment Framework of Director V None Second 2019 Subsidiaries Independent Resigned on BOD Meeting San-Cheng Chang 4 0 100% Director 2019.11.15 To Approve the Company'sCorporate Guarantees V None Independent Ching-Hsiang Hsu 4 0 100% Director To Adoption of the Company and Worldwide Subsidiaries' V None Lending of Capital to others Other matters that are required to be disclosed: To Propose the Senior executive Appointment V None 1. If any of below listed-circumstances of operation of Board Meeting occurs, it'snecessary to be disclosure, including dates of board The Company'sresponse to Independent Director'sObjection or Reservation: N/A meetings, sessions, the contents of motions, all independent opinions from Independent Directors and the Company'sresponse to such Independent Directors' opinions: Resolution: Members of the Board Present Unanimously Approved Above Proposed Items. (1) The matters shall be submitted to the board of directors for approval by resolution in accordance with Article 14-3 of the Securities and Exchange Act. 36 37


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 2. The Execution Situation of Board Members Abstaining From Discussing and Voting on any Matters Where There is a Conflict of Objection or BOD Meeting Matters under Interest Reservation by Date and Content of Motions and Follow-up (if any) Article 14-3 of any Independent Session the Taiwan SEA BOD Meeting Director Date and Content of Motions Execution Situation Session To Approve the Second Quarter of FY2019 Consolidated V None 1. The independent directors' compensation: To avoid Financial Statements interest conflicts, all independent directors recused To Propose the plan of shareholding diversification of themselves from this item in accordance with Article V None subsidiaries 206 of Company Act, and the chairman consulted other present and non-conflict directors and obtained To Amend The “Internal Control Procedure of Stock Affairs unanimously approved to this proposal. V None 2019.08.07 Unit” To report 2018 employees' profit sharing bonus and directors'compensation 2. The executive directors' compensation: To avoid interest Third 2019 conflicts, Director George Huang, Philip Peng, Carolyn To Approve the Amendments of the Internal Rules V None BOD Meeting 2019.03.20 Yeh and Stan Shih recused themselves from this item To Approve the Company's Corporate Guarantees V None First 2019 in accordance with Article 206 of Company Act and the BOD Meeting chairman consulted other present and non-conflict To Adoption of the Company and Worldwide Subsidiaries' directors and obtained unanimously approved to this V None Lending of Capital to others proposal. To avoid interest conflicts, Chairman Jason Chen, Director The Company's response to Independent Director'sObjection or Reservation: N/A Proposal of target bonus for the Stan Shih and Director Carolyn Yeh recused themselves Resolution: Members of the Board Present Unanimously Approved Above Proposed Items. executives of the Year 2018 and Acer from this item in accordance with Article 206 of Company Group Global Salary Increase Proposal Act, and Director Ji-Ren Lee consulted other present and To Approve the Third Quarter of FY2019 Consolidated Financial of the Year of 2019 non-conflict directors and obtained unanimously approved V None to this proposal on behalf of the Chairman. Statements To avoid interest conflicts, Director Stan Shih, Director To Approve the 2020 Business Plan V None Carolyn Yeh, Director Philip Peng and other attendants recused themselves from this item in accordance with To Approve the Acer's Annual Audit Plan for 2020 V None To Adjust the Framework of IoB Fund Article 206 of Company Act and the chairman consulted other present and non-conflict directors and obtained To Propose the plan of shareholding diversification of V None 2019.05.08 unanimously approved to this proposal. 2019.11.06 Subsidiaries Second 2019 To avoid interest conflicts, Chairman Jason Chen, Director Fourth 2019 BOD Meeting To Propose the capital injection to the subsidiaries V None Stan Shih, Director Carolyn Yeh, and other attendants BOD Meeting Proposal of profit sharing guideline, recused themselves from this item in accordance with To Approve the Company's Corporate Guarantees V None executives allocation and Long-Term Article 206 of Company Act, and Director Ji-Ren Lee investment of 2018 consulted other present and non-conflict directors and To Adoption of the Company and Worldwide Subsidiaries' obtained unanimously approved to this proposal on behalf V None Lending of Capital to others of the Chairman. The Company's response to Independent Director's Objection or Reservation: N/A Due to Chairman Jason Chen holding an investment company which has 4.83% common shares of HSNC on the Resolution: Members of the Board Present Unanimously Approved Above Proposed Items. cash increase round, to avoid interest conflicts, he recused Proposal of injection and structural himself from this item in accordance with Article 206 of adjustment of the subsidiaries Company Act; therefore, Director Ji-Ren Lee consulted other present and non-conflict directors and obtained 2019.08.07 unanimously approved to this proposal on behalf of the Third 2019 Chairman. BOD Meeting Due to a second degree relative of Director Ching-Hsiang Hsu employed by the company proposed to be invested, to avoid interest conflicts, he recused himself from this item To Approve the Strategic Investments in accordance with Article 206 of Company Act; therefore, the chairman consulted other present and non-conflict directors and obtained unanimously approved to this proposal. To avoid interest conflicts, Chairman Jason Chen, Director Stan Shih, Director George Huang, and Director Maverick 2019.11.06 Shih recused themselves from this item in accordance with Fourth 2019 Donation of Acer Foundation Article 206 of Company Act, and Director Ching-Hsiang BOD Meeting Hsu consulted other present and non-conflict directors and obtained unanimously approved to this proposal on behalf of the Chairman. 38 39


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 3. The list company shall disclose the information to the Board'sself-evaluation(or peer-evaluation), and the infor- “Acer's Corporate Governance Best-Practice Principles” have been amended in 2017 and 2019 to strengthen board of directors' mation includes evaluation frequency, period, scope, measures, items etc.: function and duties, and we set up a series of targets to enhance board functions, such as the attendance rate of board meeting, an appropriate policy on diversity of board members, and board of directors' performance evaluation, etc. The Implement of the Evaluation by the Company's Board The performance assessment result of the Board has been publicly disclosed on Acer Group website in accordance with Frequency Period Scope Measures Items Acer's“Measures for Performance Evaluation of the Board of Directors” from 2017. For details, please visit: https://www.acer- Annual 2019.01.01- Board Performance Board's self- Board's self-evaluation group.com. 2019.12.31 Evaluation evaluation 1. Degree of participation in the operation of the Company The Performance Evaluation of the Directors' self- evaluation 2. Enhancing the quality of decision making of the Board of Directors 3.3.2 Operational Situation of the Audit Committee Board of Directors 3. Composition and structure of the Board of Peer-Evaluation Directors The Audit Committee is responsible to supervise the Board implementation, enhance management mechanism of Board, and as- Functional 4. Election and continuing education of directors sist to advance Corporate Governance. The material duties includes assistance to execute the flows of accounting, audit, financial Committee 5. Internal Control report, and advance the quality and integrity of financial control. Performance Evaluation Directors' self-evaluation The main point to audit in this year as follows: 1. Controlling the target and mission of the Company • Reviewing Financial statements 2. Acknowledgement of the duties and • Enacting or amending the internal control systems in accordance with Article 14-5 of the Securities and Exchange Act. responsibilities of the directors 3. Degree of participation in the operation of the • Checking the efficiency of internal control systems Company 4. Election and continuing education of directors • Engaging qualified CPA 5. Election and continuing education of directors • Reviewing yearly Business Report, budget and auditing plan 6. Internal Control • Reviewing material items of acquiring or disposing of assets, endorsement and guarantee, and lending of capital to others Functional Committees' self-evaluation 1. Degree of participation in the operation of the Company 2. Acknowledgement of the duties and responsibilities of the functional committee The Audit Committee held four meetings from Jan. 1, 2019 to Dec. 31, 2019. The 3. Enhancing the quality of decision making of record of the Members' attendances is shown below: the functional committee 4. Composition and structure of the functional committee No. of Meetings No. of Meetings Meeting Attendance Title Name Note 5. Internal Control Attended Attended by Proxy Rate(%) Independent Ching-Hsiang Hsu 4 0 100% Director 4. The Target and Situation Assessment of Strengthening Board of Directors' Functions in current and most recent year: Independent F.C. Tseng 4 0 100% Director The Company has established following functional committees to actively strengthen board of director functions and imple- Independent ment good corporate governance through every functional committees' teamwork. Ji-Ren Lee 4 0 100% Director Independent Resigned on (1) For the purpose of building sound remuneration system of board of director and officer, the Remuneration Committee was San-Cheng Chang 3 1 75% Director 2019.11.15 established in August 2011 based on Board resolution in accordance with Taiwan Securities and Exchange Act and relevant Authority' ruling, it consists by three independent directors. Other matters that are required to be disclosed: (2) For the purpose of good corporate governance, the Audit Committee was established in June 2014 after board of director 1. If any of below listed-circumstances of operation of Audit Committee occurs, it'snecessary to be disclosure, including dates re-election by the shareholders meeting; it consists of all independent directors in accordance with Taiwan Securities and of board meetings, sessions, the contents of motions, Audit Committee'sresolution and the Company'sresponse to such Audit Exchange Act and Company Act. Committee'sopinions: (3) For the purpose of previewing the investment, joint venture, M&A regarding new business and other strategic investment, (1) The matters shall be submitted to Audit Committee for approval and then submitted to the Board for approval by resolu- the Investment Committee was established in June 2017 by board resolution in accordance with the Company'sArticles of tion in accordance with Article 14-5 of the Securities and Exchange Act. Incorporation; it consists of 5 board of directors, and at least 2 of 5 members shall be independent directors. (2)In addition to above (1) mentioned matters, any resolution made by over two-third of the board of directors but not ap- proved by Audit Committee. 40 41


  • Page 27

    Acer Incorporated 2019 Annual Report Corporate Governance Report Resolution made Resolution made Audit by over two-third Audit by over two-third Matters under Matters under Committee of the board of Committee of the board of Content of Motions Article 14-5 of Content of Motions Article 14-5 of Meeting Date directors but Meeting Date directors but the Taiwan SEA the Taiwan SEA and Session not approved by and Session not approved by Audit Committee Audit Committee To Approve the 2018 Financial Statements and Business Report V None To Approve the Third Quarter of FY2019 Consolidated Financial V None Statements To approve the Acer'sStatement of Internal Control System for V None 2018 To Approve the Acer'sAnnual Audit Plan for 2020 V None To Approve the Proposal for Profit & Loss Appropriation of 2019.11.06 To Propose the capital injection to the subsidiaries V None V None 2018 Fourth 2019.03.20 2019 Audit To Approve FY2020 Meeting Agenda of Audit Committee V None First 2019 To Approve the Appointment CPAs of KPMG as the Auditors of committee V None Resolution made by Audit Committee: above mentioned items have been approved unanimously by all Audit Acer Incorporated Audit Committee members who present at the meeting. committee To Approve the Amendments of the Internal Rules V None Response to the Audit Committee opinions: The board of directors supported and approved all the items proposed by Audit Committee. Resolution made by Audit Committee: above mentioned items have been approved unanimously by all Audit Committee members who present at the meeting. Response to the Audit Committee opinions: The board of directors supported and approved all the 2. The Execution Situation of Audit Committee Members Abstaining From Discussing and Voting on any Matters Where There is a items proposed by Audit Committee. Conflict of Interest: None To Approve the First Quarter of FY2019 Consolidated Financial 3. Communication Among Independent Directors and the Company'sChief Internal Auditor and CPAs: V None Statements To Approve the establishment and amendments of the Internal (1) The Company Chief Internal Auditor monthly reports internal audit execution situation to independent directors; and in V None addition, the Chief Internal Auditor regularly process internal audit report in the quarterly held Audit Committee meeting. Rules 2019.05.08 She communicates with Audit Committee members about the internal audit results and the improvement; and immediate Second To Adjust and Simplify the Investment Framework of V None report will be made to Audit Committee members for special case and circumstances if any. 2019 Audit Subsidiaries committee Resolution made by Audit Committee: above mentioned items have been approved unanimously by all (2) Audit Committee members and Chief Internal Auditor have good communication, the communication are summarized as Audit Committee members who present at the meeting. below: Response to the Audit Committee opinions: The board of directors supported and approved all the Date Keys of Communication Communitive Results items proposed by Audit Committee. 1. Fy2018 Internal Audit and Fraud The Independent Directors had no rejection and To Approve the Second Quarter of FY2019 Consolidated Investigation Report expressed reservation after consulting with the chief V None 2019.03.20 Financial Statements 2. FY2018 Statement of Internal Control internal auditor for the related contents and details to System the item(s). To Propose the plan of shareholding diversification of V None The Independent Directors had no rejection and subsidiaries 2019 Q1 Internal Audit and Fraud Investigation expressed reservation after consulting with the chief 2019.05.08 2019.08.07 To Amend The “Internal Control Procedure of Stock Affairs Report internal auditor for the related contents and details to V None the item(s). Third 2019 Unit” Audit 1. 2019 Q2 Internal Audit and Fraud committee To Approve the Amendments of the Internal Rules V None Investigation Report The Independent Directors had no rejection and expressed reservation after consulting with the chief Resolution made by Audit Committee: above mentioned items have been approved unanimously by all 2019.08.07 2. The “Internal Control Systems of internal auditor for the related contents and details to Audit Committee members who present at the meeting. Shareholder Services Unit” which is one of the item(s). the Company'sInternal Control Systems Response to the Audit Committee opinions: The board of directors supported and approved all the The Independent Directors had no rejection and 1. 2019 Q3 Internal Audit and Fraud items proposed by Audit Committee. expressed reservation after consulting with the chief 2019.11.06 Investigation Report internal auditor for the related contents and details to 2. 2020 Annual Audit Plan the item(s). 42 43


  • Page 28

    Acer Incorporated 2019 Annual Report Corporate Governance Report (3) The CPAs the Company appointed regularly process audit or reviewing result report in the quarterly held Audit Committee meeting, and the matters to be communicated with independent directors required by laws and regulations. CPAs will im- 3.3.4 Enforcement of Corporate Governance Implemented by mediate report to Audit Committee members for special case and circumstances if any. the Company and Reasons for Discrepancy (4) Audit Committee members and CPAs have good communication, the communication are summarized as below: Discrepancy between Enforcement Status the corporate Date Keys of Communication Communitive Results governance principles implemented by Evaluation items 1. Results of Auditing FY2018 Financial The Independent Directors had no rejection and the Company and 2019.03.20 Statement expressed reservation after consulting with the CPAs for Yes No Summary the Principles, and the related contents and details to the item(s). the reason for the 2. Update of Relevant laws and regulations discrepancy 1. Results of Reviewing 2019 Q1 Financial The Independent Directors had no rejection and 1. Does the company establish and 4 The Company has enacted Acer's No discrepancy 2019.05.08 Statement expressed reservation after consulting with the CPAs for disclose the Corporate Governance “Corporate Governance Best-Practice 2. Update of Relevant laws and regulations the related contents and details to the item(s). Best-Practice Principles based on Principles” to establish sound “Corporate Governance Best- corporate governance systems. 1. Results of Reviewing 2019 Q2 Financial Practice Principles for TWSE/TPEx Statement The Independent Directors had no rejection and Listed Companies”? 2019.08.07 expressed reservation after consulting with the CPAs for 2. Update of the laws and regulations with the related contents and details to the item(s). 2. Shareholding structure & respect to corporate governance. shareholders' rights 1. Results of Reviewing 2019 Q3 Financial The Independent Directors had no rejection and (1) Does the company establish an 4 The Company has enacted related No discrepancy 2019.11.06 Statement expressed reservation after consulting with the CPAs for internal operating procedure procedures to handle the shareholders' 2. Update of Relevant laws and regulations the related contents and details to the item(s). to deal with shareholders' proposals, disputes and litigations, and suggestions, doubts, disputes designated the Office of Shareholders' and litigations, and implement Affairs, Investment Relations Unit, and based on the procedure? Legal Unit to take care to these issues in accordance with these procedures. (2) Does the company possess the 4 The Company holds information on the No discrepancy list of its major shareholders as identities of major shareholders and its 3.3.3 Situation of Supervisor's participation in Board Opera- well as the ultimate owners of ultimately controlling persons. those shares? tion (3) Does the company establish 4 The Company has established the No discrepancy and execute the risk appropriate risk control mechanism Not Applicable management and firewall and firewalls according to Internal system within its conglomerate Controlling Systems and related structure? procedures such as rules of supervision over subsidiaries, rules governing endorsement and guarantee, and the rules governing acquisitions and dispositions of assets, etc. (4) Does the company establish 4 The Company enacted Regulations on No discrepancy internal rules against insiders Insider Trading to prevent any illegal trading with undisclosed activities in terms of insider trading. information? 3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and 4 The Company has set the diversity No discrepancy implement a diversified policy policy of the board of directors by for the composition of its of issued and valid Acer's Corporate members? Governance Best Practice Principles. Moreover, the Company endeavors to execute the diversity policy and will increase the number of female or different-nationality candidates on the shareholders meetings, re-electing all directors, in 2019. 44 45


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    Acer Incorporated 2019 Annual Report Corporate Governance Report Discrepancy between Discrepancy between Enforcement Status the corporate Enforcement Status the corporate governance principles governance principles implemented by implemented by Evaluation items Evaluation items the Company and the Company and Yes No Summary the Principles, and Yes No Summary the Principles, and the reason for the the reason for the discrepancy discrepancy (2) Does the company voluntarily 4 The Company has set up Audit No discrepancy 4. Does a TWSE/TPEx listed company 4 On May 8th, 2109, Board of Directors No discrepancy establish other functional Committee, Remuneration Committee, set up a full/part-time corporate has resolved that Acer General Counsel committees in addition to the and Investment Committee. Acer governance unit or personnel to be acting as Corporate Governance Remuneration Committee and is willing to set up other functional in charge of corporate governance Officer and “Procedures to Standard the Audit Committee? committees depends on practical affairs including, but not limited to, Operating Procedures for the Handling needs. providing directors and supervisors of Requests made by Directors”, which with required information for appoints The Secretary of Board of (3) Does the company establish 4 The Company has formulated rules No discrepancy business execution, assisting Directors as the agenda working group a standard to measure the and procedures for board of directors' board of directors and supervisors of Board of Directors and functional performance of the Board, performance assessments, and in in compliance with laws and committees, and Corporate Governance implement it annually, that each year we conduct regularly regulations, handling relevant Officer leads the Company's Global recommend its result to Board scheduled performance assessments of matters with board meetings and Finance, Legal, Office of Shareholders' of Directors, and make the the board of directors, and the result of shareholders meetings according Affairs, HR, Corporate Venture and result as reference of individual assessments will be offered to Board of to the laws, processing corporate relevant departments to comprise a directors' remuneration and his Directors, and the result of assessments registration and amendment specific Corporate Governance Team renomination? will be considered for compensation registration, and preparing minutes to handle related matters as following and renomination of each directors. of board meetings and shareholders summary: (4) Does the company regularly 4 1. The annual evaluation by the CPA is No discrepancy meetings? 1. Developing and designing a evaluate the independence of one of the main duties of the Audit competent system to improve CPAs? Committee, and being passed by transparency, compliance and the Board of Directors meeting. implementation of internal auditing. 2. The Board of Directors and Au- 2. Handling the affairs of Shareholder's dit Committee comprehensively meetings, including but not limited evaluates the independence of preparing and providing Shareholder's CPA based on CPA's Statement of meeting notices, agendas and Independence and items stated in minutes within the prescribed period. relevant regulations. The important 3. Sending the board of directors evaluation items are summarized as (including independent directors, following: Audit Committee and other functional committees) the notice, information (1) Whether the management of the and materials which will be discussed Company will respect objective in the meeting at least 7 days in and challenging audit proce- advance. dures. 4. Providing and updating the status (2) Whether CPA's non-audit service of applicable laws and regulations may affect the independence of related to the Company's operation CPA's auditing. and business to assist the board of (3) Whether CPA firm enacts in- directors (including independent dependence rules and request director) in compliance. the itself, staffs and any other 5. Does the company establish a 4 The Company has established the No discrepancy person to keep independence communication channel and build appropriate communication channels in accordance with the Norm of a designated section on its website with suppliers, buyers, banks, investors Professional Ethics for CPA, and for stakeholders, including but not and other stakeholders, including a prohibit insider trading, misus- limited shareholders, employees, stakeholders section on our website. ing internal information or any customers, and suppliers, as well Also, the "Stakeholder Grievance behavior which the security or as handle all the issues they care Mechanism" has been disclosed on Acer capital market may be mislead- for in terms of corporate social Inc.'s official website(http://www.acer- ing. responsibilities? group.com) and there is a public E-mail (4) Whether the CPA mandatory Box (Whistleblower.acer@acer.com) rotation is applied and imple- handled by a dedicated officer. mented to the lead auditor and review auditor in accordance with competent regulations. 46 47


  • Page 30

    Acer Incorporated 2019 Annual Report Corporate Governance Report Discrepancy between Discrepancy between Enforcement Status the corporate Enforcement Status the corporate governance principles governance principles implemented by implemented by Evaluation items Evaluation items the Company and the Company and Yes No Summary the Principles, and Yes No Summary the Principles, and the reason for the the reason for the discrepancy discrepancy 6. Does the company appoint a 4 The Company's Office of Shareholders' The Company's Office of 8. Is there any other important 4 1. The relevant information has been No discrepancy professional shareholder service Affairs will take charge in, with the Shareholders' Affairs will information to facilitate a better disclosed on Acer Inc.'s official agency to deal with shareholder standard which is no less than the one take charge in the affair understanding of the Company's website (https://www.acer-roup. affairs? of professional shareholder service of shareholder meeting corporate governance practices com/ag/en/TW/content/home) and agency, the affair of shareholder specifically. (e.g., including but not limited to the chapter of Corporate Social meeting specifically in accordance employee rights, employee wellness, Responsibility in the annual reports with Regulations Governing the investor relations, supplier relations, 2. The Company has set up an exclusive Administration of Shareholder Services rights of stakeholders, directors' and web site for the new labor pension of Public Companies. supervisors' training records, the system containing information for implementation of risk management employees regarding to the laws and 7. Information Disclosure policies and risk evaluation regulations, and to offer assistance (1) Does the company have a 4 The Company has set up Acer Group No discrepancy measures, the implementation of 3. In additional to the training courses corporate website to disclose website (https://www.acer-group.com/ customer relations policies, and required by authorities, the Company both financial standings ag/en/TW/content/home ) containing purchasing insurance for directors also held related training courses for and the status of corporate the information regarding its finance and supervisors)? members of the Board. governance? and operations. The Company also 4. The Company has clearly set forth discloses the enforcement of corporate in the rules for the proceedings of governance in the shareholders' Board meetings, that a director shall meeting and other institutional investor voluntarily abstain from voting on a meetings. proposal involved with his/her own (2) Does the company have 4 The Company has one speaker, one No discrepancy interests. other information disclosure acting speaker and a designated team 5. It's stipulated in Acer's “Corporate channels (e.g. building an to be responsible for gathering and Governance Best-Practice English website, appointing disclosing relevant information. Principles” that in case the designated people to handle Chairman also acts as the President information collection or the Chairman and President and disclosure, creating a are spouses or relatives within spokesman system, webcasting one degree of consanguinity, it investor conferences)? is advisable that the number of (3) Does the company announce 4 The Company has announced and Only slight gap of the independent directors be increased and declare current annual declared the first, second and third period of announcement accordingly, and there will be financial report within 2 quarter financial reports and the and declaration of 4 independent directors of the months after the close of operation of each month in advance of the annual financial Company on 2019. each fiscal year, and early the legal period. report, the others 6. Acer has purchased liability announce and declare the Although it is difficult for the Company are all complied with insurance for directors and officers. financial reports of First, to announce and report the annual “Corporate Governance 7. The Company has actively Second, Third Quarter and financial report within two months Best-Practice participated in community or the company's operations of after the end of the fiscal year, we still Principles”. charitable activities, as the content each month within the lawful completed the announcement and More time is required, in the chapter of Corporate Social period? declaration within the period specified it is because that the Responsibility. in Article 36 of the Securities and Company has a large 8. The company has set the targets and Exchange Act. number of global strategies of Green Mission measures subsidiaries, which are such as reduction of Greenhouse Gas located in different and Carbon Emissions, Energy and countries, in which the Water saving etc. accounting standards and systems are different; in addition, annual reports are not only prepared by these subsidiaries but also shall be reviewed and audited by CPAs. 48 49


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    Acer Incorporated 2019 Annual Report Corporate Governance Report Enforcement Status Discrepancy between 3.3.5 The Establishment and Enforcement of Remuneration the corporate governance principles Committee implemented by Evaluation items the Company and Yes No Summary the Principles, and A. Remuneration Committee held four meetings from Jan. 1, 2019 to Dec. 31, the reason for the 2019. The record of their attendance is shown below: discrepancy 9. Please indicate the improvement that has been done for the results of the corporate governance evaluation issued by the No. of Meetings No. of Meetings Meeting Attendance Title Name Remark Center for Corporate Governance of TWSE in the most recent year and provide priority measures for those items that have Attended Attended by Proxy Rate(%) not yet been improved. Independent Director Ji-Ren Lee 4 0 100% (1) The company has completed the priority measures for the item last year as following: Independent Director F.C. Tseng 4 0 100% a. Enhance the disclosure of the communication among interdependent directors, chief internal auditor and CPA on the Independent Director Ching-Hsiang Hsu 4 0 100% Company's website. b. Amend the Company's Corporate Governance Best Practice Principals to improve the diversification policy of the Other mentionable items: board of directors. (2) The Board has appointed Corporate Governance Officer to be responsible for Corporate Governance on May 8th, 2019. 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company's response (3) The Company makes the following as the priority measures this year: to the remuneration committee's opinion (eg., the remuneration passed by the Board of Directors exceeds the recommen- Disclosing the practice of Corporate Governance department in annual reports and our official website. dation of the remuneration committee, the circumstances and cause for the difference shall be specified): None 2. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members' opinions and the response to members' opinion should be specified Resolution made by over two-third of the board of Date Meeting Major Resolutions directors but not approved by Remuneration Committee To report 2018 employees' profit sharing bonus and directors None Proposal of target bonus for the executives of the Year 2018 and Acer Group Global Salary Increase Proposal of the Year of None First 2019 2019 2019.03.20 BOD Meeting Resolution made by Remuneration Committee: above mentioned items have been approved unanimously by all Remuneration Committee members who present at the meeting. Response to the Remuneration Committee opinions: The board of directors supported and approved all the items proposed by Remuneration Committee. Proposal of profit sharing guideline, executives allocation and None Long-Term investment of 2018 Second To Propose the Senior executive Appointment None 2019.05.08 2019 BOD Resolution made by Remuneration Committee: above mentioned items have been approved Meeting unanimously by all Remuneration Committee members who present at the meeting. Response to the Remuneration Committee opinions: The board of directors supported and approved all the items proposed by Remuneration Committee. Proposal of target bonus for the executives of the Year 2020 None Acer Group Global Salary Increase Proposal of the Year of 2020 None Proposal of long term incentive program for the executives of Fourth None the Year 2020 2019.11.06 2019 BOD Meeting Resolution made by Remuneration Committee: above mentioned items have been approved unanimously by all Remuneration Committee members who present at the meeting. Response to the Remuneration Committee opinions: The board of directors supported and approved all the items proposed by Remuneration Committee. 50 51


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    Acer Incorporated 2019 Annual Report Corporate Governance Report (6) Not/director, supervisor, or employee of other company who controlling over the half of directors or 50% voting right of the Com- B. Responsibilities of the Remuneration Committee pany. (This item does not apply, however, in cases where the person is an independent director of the Company, its parent company, subsidiaries, or the affiliates and subsidiaries owned/controlled by the same parent company, as appointed in accordance with Taiwan The Acer Inc. “Board of Directors Remuneration Guidelines” and “Executive Remuneration Guideline” are proposed by Remunera- Securities and Exchange Act or with the laws of the country of the parent or subsidiary.) tion Committee, effective upon the approval of Acer Inc. Board of Directors. The compensation of the Board of Directors is defined (7) Not a director (managing member), supervisor (observer), or employee of other company, together the person's spouse, be as of the chairman, general manager, or equivalent officer of the Company. (This item does not apply, however, in cases where the person is an in “Acer's Articles of Incorporation”. Where there are earnings at the end of the fiscal year after making up the losses of previous independent director of the Company, its parent company, subsidiaries, or the affiliates and subsidiaries owned/controlled by the same years. Then, if any balance left over, no more than 0.8% of profits shall be distributed as profit sharing for the Board of Directors parent company, as appointed in accordance with Taiwan Securities and Exchange Act or with the laws of the country of the parent or according to Acer Inc. “Board of Directors Remuneration Guidelines”. Employee Director are not entitled to receive Director profit- subsidiary.) sharing. (8) Not a director (managing member), supervisor (observer), officer, or shareholder holding 5%t or more of the Company shares, of a specified company or institution that has a financial or business relationship with the Company. (This item does not apply, however, in The remuneration of Acer executive is governed under Acer Group “Executive remuneration guideline”. The short-term incentive cases where specified company or institution holds 20% or more of the total number of issued shares but not over 50%, in the same time, the person is an independent director of the Company, its parent company, subsidiaries, or the affiliates and subsidiaries owned/ links to both individual and company overall team performance, while the long-term incentive links to long-term shareholders' controlled by the same parent company, as appointed in accordance with Taiwan Securities and Exchange Act or with the laws of the value. The annual KPIs, which includes a portion of strategic KPIs assigned by the board whether financial or non-financial, ensures country of the parent or subsidiary.) the executive team move on the same direction to reach the strategic goal of the company. Standards of Business Conduct (SBC) (9) Not a professional individual, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or in- stitution that, provides audit services, or the aggregated compensation exceeds NT$ 500,000 in the past 2-year for commercial, legal, is reminded and confirmed by each executive on the compensation sign back letter each year. financial, accounting services to the Company or to any of its affiliate, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to Taiwan Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations. C. Professional Qualifications and Independence Analysis of Remuneration (10) Not been a person of any conditions defined in Article 30 of the Company Law. Committee Members Criteria Meets One of the Following Professional Qualification Requirements, Together with at Independence Criteria (Note) 3.3.6 Code of Ethics and Business Conduct Least Five Years' Work Experience A judge, public An instructor or prosecutor, Has work Number of As good corporate citizens Acer Group respect human rights, local communities and compliance with laws, environment, ethics, higher position Other Public attorney, experience in a department Certified Public in the Companies safety standards, regulations and social norms. Based on our core values of "Serve with honor and work with pride", we have formu- of commerce, in Which the Accountant, or areas of lated a Standards of Business Conduct (SBC) document to guide us on how we interact with each other, our customers, our business law, finance, Individual is Title other professional commerce, Remark accounting, or Concurrently or technical law, partners, our shareholders and the communities where the Acer Group does business. This is done every day in every decision and other academic Serving as an specialist who has finance, or department 1 2 3 4 5 6 7 8 9 10 Remuneration related to the passed a national accounting, Committee every action by each one of us. We continue to build on our reputation for trust, integrity and honesty, both internally and exter- examination and or otherwise business needs Member of the Company been awarded necessary nally, by appreciating people, their diversities and cultures. a certificate in for the in a public or a profession business private junior college, college necessary for the of the You are welcome to visit Acer Group website (http://www.acer-group.com) for the details of our “Standards of Business Conduct.” Name business of the Company or university Company Discrepancy between the Independent Ji-Ren Enforcement Status corporate governance Director Lee 4 4 4 4 4 4 4 4 4 4 4 4 4 principles implemented Independent F.C. Items 4 4 4 4 4 4 4 4 4 4 4 0 by the Company and the Director Tseng Yes No Summary Principles, and the reason Ching- for the discrepancy Independent Director Hsiang 4 4 4 4 4 4 4 4 4 4 4 1 Hsu 1. Establishment of Corporate Conduct and Ethics Policy Note: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office. and Implementation Measures (1) Not an employee of the Company or any of its affiliates. (1) Has the Company 4 (1)Integrity is the most important core value No discrepancy (2) Not a director or supervisor of the Company or any of its affiliates. (This item does not apply, however, in cases where the person is an formulated a Board- of Acer's culture. The Board of Directors independent director of the Company, its parent company, subsidiaries, or the affiliates and subsidiaries owned/controlled by the same approved policy related and the management team are dedicated parent company, as appointed in accordance with Taiwan Securities and Exchange Act or with the laws of the country of the parent or subsidiary.) to code of ethics and to enforcing the Company's guideline on business Conduct? Are corporate conduct and ethics. Apart from (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the the Company's guidelines the "Standards of Business Conduct (SBC) ", person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or on corporate conduct Acer further formulated and promulgated ranking in the top 10 in holdings. and ethics provided in a series policies related to business (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, the officers set forth in internal policies and integrity, including “Anti-Bribery and Anti- paragraph 1 or any of the persons listed in the preceding two subparagraphs. disclosed publicly? Have Corruption Policy” approved by the Board (5) Not/director, supervisor, or employee be as of a shareholder that directly holds 5% or more of the total number of issued shares of the the Board of Directors on March 20, 2018, “Regulations on Insider Company, a top 5 shareholder, or the juristic person or the authorized representative of the juristic person who is the director, supervi- and the top management Trading”, “Export Compliance Policy”, sor, or employee of the Company elected in accordance with Article 27 of Taiwan Company Act. (This item does not apply, however, in team demonstrated “Antitrust and Fair Competition Guidelines”, cases where the person is an independent director of the Company, its parent company, subsidiaries, or the affiliates and subsidiaries their commitments to “Group Personal Data Protection owned/controlled by the same parent company, as appointed in accordance with Taiwan Securities and Exchange Act or with the laws implement the policies? Management Policy” and so on. of the country of the parent or subsidiary.) 52 53


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    Acer Incorporated 2019 Annual Report Corporate Governance Report Discrepancy between the Discrepancy between the Enforcement Status corporate governance Enforcement Status corporate governance principles implemented principles implemented Items Items by the Company and the by the Company and the Yes No Summary Principles, and the reason Yes No Summary Principles, and the reason for the discrepancy for the discrepancy (2) Has the company 4 (2)As above-mentioned, Acer formulated No discrepancy 2. Corporate Conduct and established any and promulgated a series policies related Ethics Compliance Practice evaluation system for to business integrity. Furthermore, Acer 4 (1) Has the company (1) To avoid transactions with those with No discrepancy analyzing its business established the Risk Management Working conducted investigation unethical records, all business activities activities periodically to Group in 2012, the membership of which regarding unethical in Acer will be conducted by the operation avoid unethical conducts, spans the Legal, Finance, Human Resource, records with whomever department to review and evaluation of and strengthen the Supply Chain Management, Enterprise the Company doing current and potential business partners, and preventive measures, Communication, Marketing, QA & Services, business with, and the Legal Unit will review the contracts. Acer when establishing IT, Environmental Safety and Health, included business will request its Business Partners to enter appropriate preventive Asset Management, all Product Business conduct and ethics into a “VENDOR'S LETTER OF DECLARATION” measures at least Groups, and the Corporate Sustainability related clauses in the or other documents related to compliance to against the acts listed Office. Every year, the working group business contracts. ensure honesty and integrity in all dealings in Paragraph 2 of holds regular meetings, inviting members with or on behalf of Acer. Acer also remind Article 7 of the Ethical of various working groups to engage in or request appropriate business partners to Corporate Management identifying, assessing, and discussing risks comply affirm with their compliance with Best Practice Principles the Company may face in three aspects: this policy by sending email every year. for TWSE/GTSM Listed economic, environmental, and social. The Companies or other Risk Management Working Group uses risk higher potential mapping to assess potential threats to the (2) Has the Company set 4 (2)Acer Group has committed ourselves to No discrepancy unethical conducts in the Company's future operations based on the up dedicated unit in meeting high standards of law and ethics relevant policies? likelihood of various risks and the extent of charge of promotion compliance to carry out our business. the damage were they to occur, classifying and execution of the The management is required to establish the risks and ensuring proper prioritization company's corporate a paragon of placing a high value of of risk management strategies. At the conduct and ethics, corporate conduct and ethics. Under the same time, we use sensitivity analysis and the dedicated unit supervision of the board of directors, HR, and stress testing to undertake further shall report to the board Legal, Internal Auditor and other cross- regularly quantitative analysis of relatively regularly (at least once functional teams co-work to promote the high risk business activities in the scope of every year)? Company's corporate conduct and ethics Acer business, and aggregates the results and urge all employees and stakeholders to of these analyses and tests, then drafting act up to the corporate conduct and ethics. follow-up action plans. The assessed items, For the concrete implementation of the content and preventive measures have code of conduct and ethics, the pertinent exceeded the relevant provisions of Article compliance status, as an audit item of the 7, Paragraph 2 of the “Ethical Corporate annual audit plan, will be reported to Audit Management Best Practice Principles for Committee and the Board of Directors TWSE/GTSM Listed Companies” meeting by Chief Internal Auditor. The core 4 implementation is summarized as follows: (3) Has the company (3)As above-mentioned, Acer has formulated No discrepancy established relevant and promulgated a series policies related 1. Reviewing contractual terms and policies for preventing to business integrity. The plan to prevent conditions to avoid dealing with someone any unethical conduct? unethical conducts, including normative who has negative record regarding Are the implementation measures and cycles under the internal corporate conduct and ethics. of the relevant control systems; also, there are relevant 2. Promoting the Company's cooperative procedures, guidelines regulations for the disciplinary and parties to sign Acer's integrity declaration and training mechanism appeal system for employee violations. and undertaking (or including similar provided in the Furthermore, we arrange new employee terms and conditions in the contracts) policies and review the orientation and on-the-job training for 3. Disseminating Acer's corporate conduct abovementioned policies our employees to prevent any unethical and ethics relevant policies to every regularly? conduct. Most importantly, our Internal employee. Audit Unit would conduct regular audits to raise overall awareness, detect 4. Requesting anyone who participates in potential misconduct and monitor the important project to sign non-disclosure procedures compliance, then review the agreement and promise not to disclose abovementioned policies regularly. the Company's trade secret or other significant information to third party. 5. Promoting other project with respect to the corporate conduct and ethics. 54 55


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    Acer Incorporated 2019 Annual Report Corporate Governance Report Discrepancy between the Discrepancy between the Enforcement Status corporate governance Enforcement Status corporate governance principles implemented principles implemented Items Items by the Company and the by the Company and the Yes No Summary Principles, and the reason Yes No Summary Principles, and the reason for the discrepancy for the discrepancy (3) Has the Company 4 (3)As above-mentioned, we have enacted “Acer No discrepancy (2) Has the Company 4 (2)Acer has further established the No discrepancy established policies Group Standards of Business Conduct”, established policy and “Stakeholder Grievance Mechanism” which to prevent conflicts “Anti-Bribery and Anti-Corruption Policy”, security mechanisms details the standard operating procedures of interest and “Acer's Corporate Governance Best-Practice regarding the procedures and security mechanisms regarding provided appropriate Principles” and “Regulations Governing for responding to responding to the reports of ethical communication and Procedure for Board of Directors Meetings” the reports of ethical irregularities, and announced it on acer complaint channels? to prevent the conflicts of interest and irregularities, follow- group's website. provide whistleblower mailbox on our up measures after website (http://www.acer-group.com/ the investigation public/Investor_Relations/corporate.htm). is completed, and related confidentiality (4) Has the Company 4 (4) All the implementation of our accounting No discrepancy mechanisms? established effective system, internal control system, and anti- accounting and internal corruption and anti-bribery policies will (3) Has the Company 4 (3)The “Stakeholder Grievance Mechanism” No discrepancy control systems for be part of the risk assessment process. established measures to specified that we have to take measures to the implementation of The Internal Audit Unit will perform such protect the identity of the protect the identity of the informant. policies? Besides, has execution and compliance according to the informer? the Company appointed annual audit plan, and further entrusting 4. Information Disclosure internal auditor to draw external CPA to carry out an audit. up an audit plan based Has the Company published 4 The Company has published information No discrepancy on the risk assessment information relating to relating to the Company's corporate conduct for preventing from the the Company's corporate and ethics on our website (www.acer-group. unethical behaviors, or conduct and ethics on com) and Market Observation Post System, and assigned CPA to audit? its website or Market disclosed the relevant promotion results in this 4 Observation Post System? annual report. (5) Does the Company (5) Internally, “Standards of Business Conduct No discrepancy provide training (SBC)” instructs all employees how to do 5. If the company has established corporate governance policies based on TSE Corporate Conduct and Ethics Best Practice regarding ethic their business practices. Every newly coming Principles, please describe any discrepancy between the policies and their implementation: No discrepancy compliance practice staff would be requested to attend internal regularly? SBC training, and Acer has regularly held 6. Other important information to facilitate better understanding of the company's corporate conduct and ethics compliance online anti-corruption and anti-bribery practices (e.g., promote and demonstrate the company's commitment to ethical standard and provide training to its courses arranged by HR unit for current business partners; review the company's corporate conduct and ethics policy). staffs. Externally, we will emphasize the For details on the implementation of Acer's Corporate Conduct and Ethics, please refer to “Acer's Corporate Governance importance of the Policy and encourage Best-Practice Principles “. compliance with the Policy to our business partners by every gathering or opportunity, such as the annual Acer supplier conference, agents and distributor conferences. 3. Channels for reporting any 3.3.7 Disclosure to the Company's Corporate Governance ethical irregularities Principles (1) Has the Company 4 (1)We have established specific channels in No discrepancy established policy terms of reporting ethical irregularities The Company has enacted “Corporate Governance Best-Practice Principles” and related internal rules. You are welcome to visit and channels in terms in "Standards of Business Conduct (SBC) Acer Group website (http://www.acer-group.com) and Mops (http://mops.twse.com.tw) of reporting ethical "and "Anti-bribery and anti-corruption irregularities and policy". Acer has specific reporting systems designated competent both in its “Standards of Business Conduct personnel to handle such (SBC)” and “Anti-corruption and Anti- matters? bribery Policy”. In addition, Acer provides a whistleblower mailbox (Whistleblower. acer@acer.com)on our website for people to report any threats of involvement of fraudulence, corruption, violation of Acer's Standards of Business Conduct, any illegal conducts or conducts violated corporate governance by Acer employee. The Internal Audit Unit, which functions directly under the board of directors, will handle the report exclusively. 56 57


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    Acer Incorporated 2019 Annual Report Corporate Governance Report b. Ensuring all the procedures of shareholding and Board meetings in accordance with relevant laws and the guidance of cor- 3.3.8 Statement of Personnel Having Licenses Associated porate governance; with Financial Information Transparency from Compe- c. Assisting and reminding the directors to comply with laws when executing business or reaching a resolutions of Board meet- tent Authorities ings; and d. Reviewing that the resolutions whether applying to the public announce requirements, ensuring the announcement is le- Numbers gally and accurate to protect the investors using these information to their transactions. Name of Licenses Internal Auditor Financial Officer 3. Responsible to issue the notice and provide necessary materials 7 days prior to the date of Board meeting, notifying the inter- est conflicts to the proposed items in advance, and producing the meeting minutes within 20 days after the Board meeting. Certified Public Accountants (CPA) 0 3 4. Urging to arrange and register the date of shareholder meetings in advance, producing the meeting notices, agenda, minutes, US Certified Public Accountants (US CPA) 1 0 and registration to the reversion of the Company Article of Incorporation within statuary period. Certified Internal Auditor (CIA) 1 3 BS7799/ISO 27001 Lead Auditor 1 0 The continuous education of Chief Corporate Governance Officer on 2019 Institute Name of Courses Date Period Total Time Board of Director Training Status Practice Seminar to Directors(including independence Securities and Future directors), Supervisors and Corporate Governance Training Time 2019.06.20 3 hours Sponsoring Training Training Participants Institute Office: Discussing Directors and Supervisors' Liabilities Course From To Organization Hours (Board of Directors) from the Cases of Securities Market Malpractices 9 hours Corporate Governance Jason Chen, Stan Shih, George Taiwan Corporate The business influence and measures to the changing of Taiwan Corporate 2019.11.12 3 hours and Compliance: Huang, Philip Peng, F.C. Tseng, Governance Association current international tax laws 2019.03.20 2019.03.20 Governance 1.5 Anti-Corruption and Ji-Ren Lee, Ching-Hsiang Hsu, Association Taiwan Corporate Practice to Digital Resilience: the adaptability of Economic Crimes Maverick Shih,San-Cheng Chang 2019.12.20 3 hours Governance Association Directors, Supervisors and Executives Jason Chen, Stan Shih, George Taiwan Corporate Information Security Huang, Philip Peng, F.C. Tseng, 2019.05.08 2019.05.08 Governance Insurance and 3 Ji-Ren Lee, Ching-Hsiang Hsu, Association Corporate Governance Maverick Shih,San-Cheng Chang Jason Chen, Stan Shih, George Taiwan Corporate The Updates to the Huang, Philip Peng, F.C. Tseng, 2019.08.07 2019.08.07 Governance regulations of Security 1.5 Ji-Ren Lee, Ching-Hsiang Hsu, Association and Tax Maverick Shih,San-Cheng Chang Jason Chen, Stan Shih, George Taiwan Corporate Retrospect and Huang, Philip Peng, F.C. Tseng, 2019.11.06 2019.11.06 Governance Prospect of Real Estates 1.5 Ji-Ren Lee, Ching-Hsiang Hsu, Association for Business Use Maverick Shih,San-Cheng Chang The Implement and continuous education of Chief Corporate Governance Officer The Implement to the Corporate Governance Matters of 2019: 1. Assisting the Independent Directors and directors to accomplish his/her responsibilities, providing the must materials and ar- range the continuous education of directors: a. Providing directors the reversion to the laws and regulations of corporate governance matters; b. Handling and providing members of meetings the substantial meeting materials, adequate and timely information, and administrative assistances; and c. Arranging the independent directors to meet the CPA for figuring out the finance and business status of the Company; as- sisting directors (including independent directors) to communicate with internal chief audit officer for the matters of inter- nal control. 2. Assisting the procedures and resolutions of the Board and Shareholder meetings with legal compliance: a. Reporting to the implement of the relevant corporate governance affairs to the Board, independent directors and members of Audit Committee; 58 59


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.3.9 Statement of Internal Control System 3.3.9.2 Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report 3.3.9.1 A Statement on Internal Control None Date: March 18, 2020 Based on the findings of a self-assessment, Acer Incorporated (hereinafter, the “Company”) states the following with regard to its 3.3.10 For the most recent fiscal year or during the current internal control system during year 2019: 5. The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of fiscal year up to the date of publication of the annual its Board of Directors and managers. The Company has established such a system aimed at providing reasonable assurance report, disclose any sanctions imposed in accordance regarding the achievement of objectives in the following categories: (1) effectiveness and efficiency of operations (including profitability, performance, and safe-guarding of assets), (2) reliability, timeliness, transparency, and regulatory compliance of with the law upon the company or its internal person- reporting, and (3) compliance with applicable laws, regulations and bylaws. nel, any sanctions imposed by the company upon its 6. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system internal personnel for violations of internal control can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control system provisions, principal deficiencies, and the state system of the Company contains self-monitoring mechanisms, and the Company promptly takes corrective actions whenever of any efforts to make improvements a deficiency is identified. 7. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided None in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” promulgated by the Securi- ties and Futures Bureau of the Financial Supervisory Commission (hereinafter, the “Regulations”). The criteria adopted by the Regulations identify five constituent elements of internal control based on the process of management control: (1) control en- vironment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) monitoring activities. Each constituent element further contains several items. Please refer to the Regulations for details. 8. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid 3.3.11 Resolutions of the Board of Directors' Meeting and the criteria. General Shareholders' Meeting 9. Based on the results of the evaluation mentioned in the preceding paragraph, the Company believes that, as of December 31, 2019, its internal control system (including its supervision of subsidiaries), was effective in design and operation, and reason- Resolutions of the Board of Directors' Meeting ably assured the achievement of the above-stated objectives. Date Meeting Major Resolutions 10. This Statement will be an essential content of the Company's Annual Report for the year 2019 and Prospectus, and will be publicly disclosed. Any false-hood, concealment, or other illegality in the content made public will entail legal liability under • To report 2018 employees' profit sharing bonus and directors' Articles 20, 32, 171, and 174 of the Securities and Exchanged Act. compensation • To Approve the 2018 Financial Statements and Business Report 11. This Statement has been passed by the Board of Directors in their meeting held on March 18, 2020, with 0 of the 8 attending • To approve the Acer's Statement of Internal Control System for 2018 directors expressing dissenting opinions, and the remainder all affirming the content of this Statement. • To Approve the Proposal for Profit & Loss Appropriation of 2018 • To Approve the Appointment CPAs of KPMG as the Auditors of Acer Acer Incorporated Incorporated 2019.03.20 First 2019 BOD Meeting • To Approve the Amendments to Acer's “Articles of Incorporation” • To Approve the Amendments of the Internal Rules CEO Chairman • To Convene the 2019 General Shareholders' Meeting • To Approve the Company's Corporate Guarantees • To Adoption of the Company and Worldwide Subsidiaries' Lending of Capital to others • Proposal of target bonus for the executives of the Year 2018 and Acer Group Global Salary Increase Proposal of the Year of 2019 60 61


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    Acer Incorporated 2019 Annual Report Corporate Governance Report Date Meeting Major Resolutions Implementation of Resolutions in 2019 General Shareholders' Meeting • To Approve the First Quarter of FY2019 Consolidated Financial Major Resolutions Carries out the situation Statements • To Approve the establishment and amendments of the Internal Rules 1. Ratification Proposal of the Financial Statements and The shareholder resolution was adopted and approved as Business Report for the Year 2018 proposed. • To Propose the plan of shareholding diversification of subsidiaries • To Adjust and Simplify the Investment Framework of Subsidiaries 2. Discussion Proposal for Profit & Loss Appropriation for To set July 11, 2019 and August 7, 2019 as the record date and the distribution date of ex-dividend respectively. (Distribution 2019.05.08 Second 2019 BOD Meeting • To Adjust the Framework of IoB Fund the Year 2018 ratio for cash dividend : NT$0.77 per share) • To Approve the Company's Corporate Guarantees 3. Discussion Proposal of the Amendments to Acer's Articles The shareholder resolution was adopted and approved as pro- • To Adoption of the Company and Worldwide Subsidiaries' Lending of of Incorporation posed. Capital to others • Proposal of profit sharing guideline, executives allocation and Long- 4. Discussion Proposal of the Amendments to Acer's Term investment of 2018 Internal Rules A. Procedures for Acquiring or Disposing of Assets. The shareholder resolution was adopted and approved as pro- • To Propose the Senior executive Appointment posed. B. Procedures Governing Lending of Capital to Others • To Approve the Second Quarter of FY2019 Consolidated Financial C. Procedures Governing Endorsement and Guarantee Statements • To Propose the plan of shareholding diversification of subsidiaries • To Amend The “Internal Control Procedure of Stock Affairs Unit” • Proposal of injection and structural adjustment of the subsidiaries 2019.08.07 Third 2019 BOD Meeting • To Approve the Strategic Investments 3.3.12 Where, during the most recent fiscal year or during • To Approve the Amendments of the Internal Rules the current fiscal year up to the date of publication • To Approve the Company's Corporate Guarantees • To Adoption of the Company and Worldwide Subsidiaries' Lending of of the annual report, a director or supervisor has ex- Capital to other pressed a dissenting opinion with respect to a mate- • To Approve the Third Quarter of FY2019 Consolidated Financial Statements rial resolution passed by the board of directors, and • To Approve the 2020 Business Plan said dissenting opinion has been recorded or prepared • To Approve the Acer's Annual Audit Plan for 2020 • To Propose the plan of shareholding diversification of Subsidiaries as a written declaration, disclose the principal content 2019.11.06 Fourth 2019 BOD Meeting • To Propose the capital injection to the subsidiaries thereof • Donation of Acer Foundation • To Approve the Company's Corporate Guarantees None • To Adoption of the Company and Worldwide Subsidiaries' Lending of Capital to others 3.3.13 Summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual re- port, of the company's chairman, general manager, principal accounting officer, principal financial officer, chief internal auditor, chief corporate governance of- ficer and principal research and development officer None 62 63


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 3.4 Information Regarding the Company's Audit 3.5 Information on replacement of certified public Fee and Independence accountant Not applicable 3.4.1 Audit Fee Unit: NTD Thousands Accounting Audit Non-audit Fee CPA's Audit 3.6 The company's chairperson, general manager, Name of CPA Remark Firm Fee System Design Company Registration Human Resource Others Subtotal Period or any managerial officer in charge of finance Fees mainly Chang, Huei Chen 2019.01.01- related to sustainability or accounting matters has in the most recent year held a position at the accounting firm of KPMG 25,115 0 0 0 6,587 6,587 2019.12.31 and tax Tang, Tzu-Chieh consultancy its certified public accountant or at an affili- services. ated enterprise of such accounting firm 3.4.2 When the company changes its accounting firm and the None audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed 3.7 Changes in Shareholding of Directors, Super- Not applicable visors, Managers and Major Shareholders 2019 As of April 14, 2020 Pledged Pledged 3.4.3 When the audit fees paid for the current fiscal year Title Name Holding Increase Holding Holding Increase Holding Increase Increase are lower than those for the previous fiscal year by 10 (Decrease) (Decrease) (Decrease) (Decrease) percent or more, the reduction in the amount of au- Chairman & CEO Jason Chen 0 0 0 0 (16,112,864) dit fees, reduction percentage, and reason(s) therefor Director Stan Shih (Note 3) 0 0 0 shall be disclosed Director George Huang 0 0 0 0 Hung Rouan Investment Director 0 0 0 0 Corp. Not applicable Maverick Shih Legal Representative of (Representative of Hung 0 0 4,044 0 Director (Note 1) Rouan Investment Corp.) Carolyn Yeh Legal Representative of (Representative of Hung 0 0 0 0 Director (Note 1) Rouan Investment Corp.) 64 65


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    Acer Incorporated 2019 Annual Report Corporate Governance Report 2019 Pledged As of April 14, 2020 Pledged 3.8 Relationship among the Top Ten Shareholders Holding Holding Title Name Increase Holding Increase Increase Holding Increase (April 14, 2020) (Decrease) (Decrease) (Decrease) (Decrease) Director Smart Capital Corp. 0 0 0 0 Name and Relationship Shareholding Between the Company's Top Legal Representative of Philip Peng (Representative Current Spouse's/minor's by Nominee 0 0 0 0 Ten Shareholders, or Spouses Director of Smart Capital Corp.) Name Shareholding Shareholding Arrangement Remark or Relatives Within Two Independent Director F.C. Tseng 0 0 0 0 Degrees Independent Director Ji-Ren Lee 0 0 0 0 Shares % Shares % Shares % Shares Relationship Independent Director San-Cheng Chang 0 0 0 0 The spouse of (Note 2) Hung Rouan 73,629,933 2.39% 0 0.00% 0 0.00% Stan Shih this company's - Investment Corp. Independent Director Ching-Hsiang Hsu 0 0 0 0 Chairman Co-COO Tiffany Huang 220,000 0 0 0 JPMorgan Chase Bank Co-COO Jerry Kao 146,000 0 0 0 N.A., Taipei Branch in custody for Vanguard Corp.VP & President Emmanuel Fromont 280,000 0 0 0 Total International 54,123,771 1.76% 0 0.00% 0 0.00% - - - President Ben Wan 101,000 0 0 0 Stock Index Fund, a series of Vanguard President Gregg Prendergast 220,000 0 0 0 Star Funds President Andrew Hou 116,000 0 0 0 VANGUARD President Victor Chien 115,000 0 0 0 EMERGING MARKETS CTO RC Chang 101,000 0 0 0 STOCK INDEX FUND, A 42,737,897 1.39% 0 0.00% 0 0.00% - - - SERIES OF VANGUARD Corp. Governance Officer INTERNATIONAL Lydia Wu 0 0 0 0 (Note 2) EQUITY INDEX FUNDS Corp. CFO Meggy Chen 110,000 0 0 0 This company's Accounting Officer Sophia Chen 0 0 0 0 Hung Rouan Chairman is the Stan Shih 34,989,531 1.14% 399,225 0.01% 0 0.00% Investment spouse of the - President (Note 1) Maverick Shih 0 0 0 0 Corp. stakeholder to this company Note 1: The Board of Director, Hung Rouan Investment Corp., re-appointed Maverick Shih to be its representative on 2019.07.26, original its representative, Carolyn Yeh was dismissed on the same day. Besides, Maverick Shih resigned from Acer Officer from 2019.08.01. Management Board of Public Service 34,663,600 1.13% 0 0.00% 0 0.00% - - - Note 2: Lydia Wu assumed position on 2019.05.08. San-Cheng Chang resigned on 2019.11.15. Pension Fund Note 3: The decrease of shares resulted from a gift to a relative rather than a sale. Acer GDR 28,966,180 0.94% 0 0.00% 0 0.00% - - - Acer Inc. 27,080,000 0.88% 0 0.00% 0 0.00% - - - Polunin Developing 23,479,197 0.76% 0 0.00% 0 0.00% - - - Countries Fund, LLC ISHARES MSCI Shares Trading information TAIWAN ETF 23,426,737 0.76% 0 0.00% 0 0.00% - - - iShares Core MSCI None Emerging Markets ETF 23,082,872 0.75% 0 0.00% 0 0.00% - - - Note: The total share proportion hold by all family members of Stan Shih is 6.03%. Shares Pledge information None 66 67


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    Acer Incorporated 2019 Annual Report Capital and Shares 3.9 Ownership of Shares in Affiliated Enterprises (December 31, 2019) Unit: shares/ % Direct or Indirect Ownership by the Ownership by Directors/ Total Ownership Affiliated Company Supervisors/Managers Enterprises Shares % Shares % Shares % Acer European Holdings SA 147,000 100.00% 0 0.00% 147,000 100.00% Boardwalk Capital Holdings Limited 1,263,432,141 92.02% 109,639,200 7.98% 1,373,071,341 100.00% 4 Acer Digital Service Co. 128,281,861 100.00% 0 0.00% 128,281,861 100.00% company Cross Century Investment Limited 100.00% 0 0.00% company limited 100.00% limited Acer Holdings International, 191,155,465 100.00% 0 0.00% 191,155,465 100.00% Incorporated Acer SoftCapital Incorporated 158,475,324 100.00% 0 0.00% 158,475,324 100.00% Weblink International Inc. 49,674,116 67.36% 1,432,188 1.94% 51,106,304 69.30% E-TEN Information Systems Co., Ltd Acer Cyber Security Incorporated 16,000,000 10,545,000 100.00% 64.54% 0 0 0.00% 0.00% 16,000,000 10,545,000 100.00% 64.54% Capital and Acer BeingWare Holding Inc. Sertec (Beijing) Ltd. 149,778,981 company 100.00% 100.00% 0 0 0.00% 0.00% 149,778,981 company limited 100.00% 100.00% Shares limited company Acer China Venture Corp. 100.00% 0 0.00% company limited 100.00% limited Limited Limited Limited Acer China Venture Partnership 93.33% 6.67% 100.00% Partnership Partnership Partnership StarVR Corporation 32,211,790 66.80% 0 0.00% 32,211,790 66.80% AOPEN Inc. 28,970,000 40.55% 2,534,725 3.55% 31,504,725 44.10% Acer e-Enabling Data Center 162,956,113 100.00% 0 0.00% 162,956,113 100.00% Incorporated Bluechip Infotech Pty Ltd 1,225,000 33.39% 570,000 15.54% 1,795,000 48.93% GadgeTek Inc. 4,500,000 83.64% 400,000 7.44% 4,900,000 91.08% Highpoint Service Network Corporation 15,000,000 92.54% 700,000 4.32% 15,700,000 96.86% Acer Synergy Tech Corp. 6,775,489 60.88% 469,158 4.22% 7,244,647 65.10% Smart Frequency Technology Inc. 13,200,000 55.00% 0 0.00% 13,200,000 55.00% Aegis Semiconductor Technology Inc. 1,202,840 19.39% 1,626,519 26.21% 2,829,359 45.60% 68 69


  • Page 41

    Acer Incorporated 2019 Annual Report Capital and Shares 4.1 Sources of Capital 4.1.4 List of Major Shareholders (April 14, 2020) Item Shares Percentage 4.1.1 Sources of Capital (April 14, 2020) Name Unit: Share/NTD Thousands Hung Rouan Investment Corp. 73,629,933 2.39% JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Authorized Common stock Paid-in Common stock 54,123,771 1.76% Fund, a series of Vanguard Star Funds Date Price of Issuance Note Shares Value Shares Value VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL 42,737,897 1.39% July, 2019 Share/NTD10 4,000,000,000 40,000,000 3,074,933,828 30,749,338 - EQUITY INDEX FUNDS Stan Shih 34,989,531 1.14% Unit: Share Management Board of Public Service Pension Fund 34,663,600 1.13% Shares Authorized capital Acer GDR 28,966,180 0.94% Note Category Issued shares Non-issued Total Acer Inc. 27,080,000 0.88% Polunin Developing Countries Fund, LLC 23,479,197 0.76% Common shares 3,074,933,828 925,066,172 4,000,000,000 - ISHARES MSCI TAIWAN ETF 23,426,737 0.76% iShares Core MSCI Emerging Markets ETF 23,082,872 0.75% 4.1.2 Shareholding Structure (April 14, 2020) Note: The total share proportion hold by all family members of Stan Shih is 6.03%. Unit: Share Category Government Financial Other FINI and 4.1.5 Market Price Per Share, Net Value, Earning& Dividend Individual Foreign Inves- Total Number Institution Institution Institution tors For Last Two Years No. of Shareholders 6 40 550 317,853 922 319,371 Unit: NTD Shares 7,427,733 20,104,856 218,279,414 1,982,935,777 846,186,048 3,074,933,828 Period Until Mar. 31, Percentage 0.24% 0.65% 7.10% 64.49% 27.52% 100.00% 2018 2019 Item 2020 Highest 33.75 22.25 18.40 Market Price Per Share Lowest 18.65 16.40 12.80 4.1.3 Distribution of Shareholdings (April 14, 2020) Average 23.85 18.82 15.63 Par value NTD 10 Before Distribution 19.24 19.10 - Net Value Per Share After Distribution 18.46 18.65(Note) - Category The Number of Shareholders Shares Percentage 1~999 111,333 28,477,739 0.93% 3,026,914 3,028,188 Weighted Average Share Numbers - Thousand shares Thousand shares 1,000~5,000 141,416 321,648,964 10.46% Earning Per Share 5,001~10,000 32,338 248,014,980 8.07% Earning Current 1.01 0.87 - 10,001~15,000 11,308 139,969,660 4.55% Per Share Adjusted 1.01 0.87(Note) - 15,001~20,000 6,832 124,667,064 4.05% Cash Dividend (NTD) 0.77 0.44(Note) - 20,001~30,000 6,056 151,078,356 4.91% Stock Retained Earning (%) 0 0(Note) - 30,001~50,000 4,650 182,912,744 5.96% Dividend Per Share Dividend Capital Surplus (%) 0 0(Note) - 50,001~100,000 3,084 218,621,215 7.11% 100,001~200,000 1,312 182,392,626 5.93% Accumulated unpaid dividends 0 0(Note) - 200,001~400,000 535 149,194,323 4.85% P/E Ratio 23.61 21.63(Note) - 400,001~600,000 157 75,793,102 2.46% Return on Investment P/D Ratio 30.97 42.77(Note) - 600,001~800,000 87 60,071,879 1.95% Analysis Cash Dividend Yield 3.23% 2.34%(Note) - 800,001~1,000,000 43 38,485,559 1.25% 1,000,001 and above 220 1,153,605,617 37.52% The appropriation of 2019 earnings had been proposed by the Board of Directors on March 18, 2020, which included the distribu- Total 319,371 3,074,933,828 100.00% tion of cash dividends. Preferred shares: None 70 71


  • Page 42

    Acer Incorporated 2019 Annual Report Capital and Shares 4.1.6 Dividend Policy and the Execution 4.1.8 Compensation of Employees, Directors, and Supervisors 4.1.6.1 Proposed Distribution of Dividends 1. Remuneration of the Board of Directors and Employee Compensation Stipulated in Acer's Articles of Incorporation: (1) Remuneration of the Board of Directors: Due to rapid changes of the industrial situation and development trend, the Company's dividend strategy depends on annual Where there is profit in each fiscal year, after covering the accumulated losses, not more than eight thousandths (8‰) of earnings and external environments, therefore, the Company adopts balance dividend policy in accordance with relevant laws and the profit shall be distributed as profit sharing/remuneration for the Board of Directors; the standard for distribution of regulations: Cash dividends shall be distributed at least ten percent of total annual dividends, such policy has been approved at the remuneration will be recommended by Remuneration Committee and determined by the Board of Directors In accordance General Shareholder's Meeting held on June 17, 2004. with Acer Inc. “Board of Directors Remuneration Guidelines”. Employee Director are not entitled to receive Director profit- sharing. (2) Employees' Compensation Resulted from Annual Earnings: 4.1.6.2 Dividends of the Company Proposed to 2020 General Shareholders Meeting Where there is profit at the end of each fiscal year, after covering the accumulated losses, at least 4% of the profit shall be distributed as employees' compensation. 1. The Board of Directors proposed FY2019 dividends to 2020 General Shareholders Meeting as following: The employees' compensation in the previous section may be distributed in the form of either cash or stock bonus, and The beginning balance of the un-appropriated retained earnings of the Company is NT$5,577,294 in 2019. After plus the net may be distributed to the employees of subsidiaries of this Company. Qualification requirements of the employees who are income after tax of 2019 and the impact caused by the new accounting standards applied and the disposal of fair value through entitled to receive the employees' compensation may be specified by the Board of Directors. other comprehensive income financial assets, set aside legal reserve and special reserve in accordance with applicable laws 2. The standard of accruing employee compensation and remuneration of the Board of Directors and Supervisors, the standard and regulations, the total accumulative retained earnings available for appropriation is NT$1,366,138,542. It is proposed to of distributing employees' compensation in the form of stock bonus, and the accounting treatment of difference between the distribute NT$1,352,970,884 as the dividends to the shareholders, the ending balance of the unappropriated retained earn- actual distribution amount and the accrued amount: ings is NT$13,167,658, which is reserved for distribution in the future. The Company accrues employee compensation and remuneration of the Board of Directors proportionally from the pre-tax The dividends to the shareholders will be distributed by cash, and it is proposed to distribute to the shareholders whose names income which referred in Acer's Articles of Incorporation before deducting employee compensation and remuneration of the and respective shares are in the shareholders' register on the record date for ex-dividend, at a ratio of NT$0.44 per share. Board of Directors. Should there be any differences between the actual distribution amount and the accrued amount after the (Rounded down to NT$1.0 and the residue will be calculated as the Company's other income) annual financial statements is made and ratified, the difference should be treated as changes in accounting estimates and 2. It is proposed on 2020 General Shareholders Meeting by the Company's Board for distributing capital surplus cash dividends adjusted in the following year. of NT$1,014,728,163 which is derived from the issuance of new shares at a premium to the shareholders whose names and respective shares are in the shareholders' register on the record date for capital surplus cash dividend, at a ratio of NT$0.33 per 3. Distribution of Remuneration of the Board of Directors and Employee Compensation: share. (Rounded down to NT$1.0 and the residue will be calculated as the Company's other income) (1) The total amount of employees' compensation distributed in the form of either cash or stock bonus, and Remuneration of 3. Should the cash distribution of retained earnings and capital surplus be adjusted due to the amendment of laws or regulations, the Board of Directors. Should there be any differences between the actual distribution amount and the accrued amount a request by competent authorities, or any change of the numbers of outstanding share, subject to the approved distribution, after the annual financial statements is made and ratified, the revealing differences, causes and treatment: it is proposed the General Shareholders' Meeting to authorize the Board of Directors with full power to adjust the distribution • The total amount of employees' 2019 profit sharing bonus is NT$138,000,000, and the total amount of Board Directors' ratio. 2019 compensation is NT$5,697,078. The Board of Directors approved the proposal of employees' 2019 profit sharing 4. The record date for the above dividends is temporarily set on July 10, 2020, and the distribution date is set on August 6, 2020. bonus and Board Directors' compensation on March 18, 2020. The employees' profit sharing bonus and Board Directors' Should the dates above be adjusted due to the amendment of laws or regulations, a request by competent authorities, it is compensation are to be distributed in cash. proposed the General Shareholders' Meeting to authorize the Board of Directors with full power to adjust accordingly. • There is difference of NT$12,346 between the actual distribution amount and the accrued amount, and this differ- ence will be recognized as profit or loss at next year. (2) The proportion that the amount of employees' compensation distributed in stock bonus to net income stated in this year 4.1.7 Analysis on Impact of Proposed Stock Dividends Ap- financial statement or individual financial reports, and the total amount employee compensation: Not applicable propriation in Terms of Operating Results, Earnings Per 4. The actual distribution to the remunerations to employees, Directors and Supervisors in 2018(including distributed shares, amount and price of shares.) Should there be any differences between the actual distribution amount and the accrued amount Share and Rate of Return of Shareholders' Investment after the annual financial statements is made and ratified, the revealing differences, causes and treatment: Not Applicable 2018 Dividend Distribution Actual Dividend Distribution Proposed by the BOD Amount Share Remunerations to Employees is paid in cash NTD 163,312,526 NTD 163,312,526 - Remunerations to Employees is paid in stock NTD 0 NTD 0 0 Share Remunerations to Directors NTD 6,910,504 NTD 6,910,504 - Total NTD 170,223,040 NTD 170,223,040 0 Share 72 73


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    Acer Incorporated 2019 Annual Report Capital and Shares 4.1.9 The Execution for Shares Buyback (April 14, 2020) Date of issuance November 1,1995 July 23, 1997 Description 1. The status of Buyback (executed): None Number of valuable securities Each unit stands for Acer's 5 common Each unit stands for Acer's 5 common demonstrated shares shares Rights and obligations of GDR holders Same as Acer's common shareholders Same as Acer's common shareholders 2. The status of Buyback (executing): Consignee None None Number of times of Buyback Number 16 Depository organization Citicorp Citicorp Custodian organization Citibank Taipei Branch Citibank Taipei Branch Purpose of Buyback In order to maintain the Company's credit and shareholders' equity 5,793,217 units of Global Deposit Receipt as representing 28,966,180 shares of Type of Shares Buyback Common Shares Balance not retrieved common stocks Estimated amount for Buyback NTD 30,477,974,569 The expenses incurred by issuance The expenses incurred by issuance Estimated Period of Buyback March 13, 2020 to May 5, 2020 being taken to offset premium reserve. being taken to offset premium reserve. Method to allocate fees incurred during Expenses incurred during existence Expenses incurred during existence Estimated Number of Shares to Buyback 230,000,000 Shares the period of issuance and existence being taken as expenses of the current being taken as expenses of the current NTD 10.05 ~ NTD 13.50 term. term. Announced Price Range of Buyback Shares Buyback continued if the market price was below the stated Any key issue for the depository and price range. None None custodian agreements Number of bought back Shares 27,080,000 Shares Highest US$ 3.52 Amount of bought back Shares NTD 361,943,540 2019 Lowest US$ 2.63 Market Average US$ 3.05 Ratio of Number bought back Shares to Estimated Number 11.77% Price Per of Buyback Shares (%) Until Highest US$ 3.05 Share March 31, Lowest US$ 2.18 2020 Average US$ 2.73 4.2 Corporate Bonds None 4.5 Employee Stock Options None 4.3 Special Shares None 4.6 Restricted Stock Awards None 4.4 Global Depository Receipts (GDRs) Issuance (March 31, 2020) 4.7 Issuance of New Shares Due to Company's Date of issuance Mergers and Acquisitions November 1,1995 July 23, 1997 Description Date of issuance November 1,1995 July 23, 1997 None Location of issuance and transaction London London Total amount of issuance US$220,830,000 US$160,600,000 Unit price of issuance Total number of units issued US$32.475 6,800,000units US$40.15 4,000,000units 4.8 Issuance of New Shares by Cash Sources of valuable securities Capital increased in cash Capital increased in cash demonstrated None 74 75


  • Page 44

    Acer Incorporated 2019 Annual Report Acer’s Business Formula 5.1 Business content 5.1.1 Business Scope 5.1.1.1 Business Portfolio Founded in 1976, Acer is now one of the world's top ICT companies and has a presence in over 160 countries. As Acer looks into the future, it is focused on enabling a world where hardware, software and services will fuse with one another to open up new pos- sibilities for consumers and businesses alike. Acer's 7,700 employees are dedicated to the research, design, marketing, sale, and support of products and solutions that break barriers between people and technology. 5 Others 15% Notebook Display 13% 60% Notes: Desktop PC 12% 1. NB includes detachable 2-in-1 NB PC. 2. Desktop PC excludes displays. 3. Display includes desktop monitor and projector. 4. Others include servers, android device, service, accessories, Acer's Business and subsidiaries. 2019 NT$234,285 Million Formula 5.1.1.2 Industry Highlights 1. Status and Opportunity: AIoT is the convergence of artificial intelligence (AI) and internet of things (IoT) technologies and solutions, which leads to smarter networks and systems that are becoming ever more capable of solving problems across a diverse number of industry verticals. The direct connectivity of AIoT devices to the cloud has opened the way for a wider scope of innovation. AI adds value to IoT with big data analytics and machine learning to more sophisticated decision making, while IoT brings the additional benefits of connectivity, signaling, and data exchange to AI. Medical, smart transportation or cities are examples of the various solutions being developed by Acer through AIoT. The surge in connectivity through the internet and cloud also brings the need for enhanced security measures to ensure the information of companies and organizations stays safe against cyberattacks. Acer Cyber Security, an Acer subsidiary, is an established leader of cyber security business in Taiwan and offers solutions in this realm. Under the situation of the COVID-19 virus, restrictions applied to staff across the globe to work from home is creating in- creased demands for notebook PCs, Chromebooks and other mobile devices to enable working from remote locations and ensure business continuity. Also, as people learn to adopt the Otaku culture during the pandemic, demands for home enter- tainment devices are also seeing growth, such as the global shortage of a popular gaming console that is distributed by Acer subsidiary, Weblink International, in Taiwan. 76 77


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    Acer Incorporated 2019 Annual Report Acer’s Business Formula 2. Upstream to Downstream Suppliers: 5.1.1.3 Technology and R&D Consumers In 2019, Acer spent NT$2.57 billion on research and development, which accounted for 1.10% of total revenues, focusing on user interface, industrial design and usage scenarios, ICT related hardware and software, IoT technology. In addition, the company has Manufacturer of Dealers been building on its existing PC business and expanding into new areas that can seamlessly integrate PCs with new software ap- materials and Educational components plications and also integrate cloud services in its transition to a “hardware + software + services” company. Focusing on areas with institutions Acer high growth opportunities, Acer has been working on designs that fulfill the needs and desires of various markets, such as mobile professionals, gamers, creators, and education. Original design Government manufacturers (ODM) System integrators Underscoring the importance it places on research and development, in 2019 Acer ranked No. 2 in Taiwan patent applications with 565 filings, up 19% from the previous year. Corporate clients With the commitment in designing for customer needs, Acer has received many international awards for design excellence in 2019: Design Awards 3. Trends: Acer's core business includes notebook and desktop PCs, projectors, monitors, gadgets and other smart devices. While continuing to research and innovate to enhance its product offerings, Acer has also dedicated more resources to segments with Design Award Award Winners high growth opportunities to optimize investments, such as gaming PCs, thin-and-light notebooks, and Chromebooks. With Creator notebooks: ConceptD 7 & ConceptD 9 notebooks the prevalence of AIoT, Acer has actively invested in new businesses, including digital signage, servers, cyber security, and other Good Design Award Commercial notebook: Acer TravelMate P6 cloud application solutions. Some of these services are provided through the various Acer subsidiaries. of Japan Thin-and-light notebook: Acer Swift 7 Altos Computing supplies servers integrated with other software and services to offer a wide range of solutions, and has won more than a dozen high-performance computing (HPC) tenders worldwide in 2019. Red Dot Award of World's first gaming brand to win the Red Dot brand award - Predator Acer Synergy Tech lets companies focus on business development by taking care of the systems integration. It provides cus- Germany: brand tomers with a one-stop-shop of integrated IT services including planning, integration, installation, and management of enter- prise information infrastructure. Thin-and-light notebooks: Acer Swift 7 & Swift 5 Red Dot Award of Chromebook: Acer Chromebook 715 & Chromebook 11 AOPEN offers digital signage solutions, such as kiosks to speed up the ordering process in fast food restaurants or to relief Germany: product design Display: Predator XB3 gaming monitor customers from having to stand in a line queueing to be served. Edge-computing device: aiSage 4. Competition: The gaming market is now an entire ecosys- Figure: Social Network Platform for Gamers Computex design tem that has grown from hardware to esports events to and innovation Predator Thronos gaming chair gaming social platforms, and the competition is rigorous. gold award In gaming hardware, Acer has stood out from competition by introducing generation after generation of its advanced Social Computex design thermal cooling solutions to enable its gaming notebooks Media and innovation Smart parking and payment system (by subsidiary Acer ITS) Adverts Tourna- special award and desktops to run at peak performance. Each year, Acer's ment Predator League esports event has expanded in participat- Creator desktop: ConceptD 500 ing teams, and in both the physical and online audiences. Computex design Gaming notebook: Predator Triton 900 Finally, is the latest addition to the ecosystem is Planet9, an and innovation Thin-and-light notebook: Acer Swift 7 open community platform for gamers to build their team, Agency Coach award Peripherals: Acer OJO 500 mixed reality headset & aiSage edge- train, and challenge for victory. Planet9 computing device Through continuous research, Acer identified a new group Gaming: Predator X Desktop & Predator 900 notebooks, Predator of users who have chosen gaming PCs for their powerful Thronos gaming chair iF Design Award performance to manage their creative work. This is a group Thin-and-light notebook: Acer Swift 7 Ticketing Course of creators, such as graphic designers, filmmakers, engi- Peripheral: Acer Smart Speaker neers, architects, and developers who need quiet yet pow- Career erful functioning PCs, which is the inspiration behind the Hardware Develop- Software CES 2019 Thin-and-light notebook: Acer Swift 7 ConceptD brand of high-end Windows 10 desktops, note- ment books and monitors. At the same time, the PC industry continues to demand thinner, lighter, and more mobile devices. Acer has successfully intro- duced a series of notebooks weighing under 1 kg and measuring less than 1 cm thin. 78 79


  • Page 46

    Acer Incorporated 2019 Annual Report Acer’s Business Formula New Technologies 2. The Future of Market Demand and Supply • In the smart medical field, Acer has forged a cross-industry cooperation with Novartis Taiwan, combining advanced AI and ICT According to IDC (Feb. 20, 2020), the worldwide PC industry will decline by 7% in 2020. However, in notebooks IDC highlighted two solutions with the pharmaceutical industry's expertise in diseases and treatments. The cooperation will introduce AI technol- segments expected to continue their growth momentum: ultra-slim (<18 mm) with 14% and Chromebooks with 9% growth com- ogy into clinical trial design, inspection and registration, disease detection, and patient care integration. Acer and Novartis pared to the previous year. In the commercial market there is opportunity to grow in notebooks in the Pan America region, while Taiwan will start by targeting macular degeneration, diabetic retinopathy, and cardiovascular diseases, and aim to build a smart medical ecosystem in Taiwan that is compliant with the information security regulations, and to accelerate smart medi- overall the consumer PC segment is expected to decline. cal treatments' go to market. The global CPU supply issue that began at the end of 2018 continued throughout 2019 and deeply impacted on Acer's PC output. • Acer has been actively involved in realizing the smart city vision. Its subsidiary, Acer Being Communication, unveiled several The mismatch of CPU type supply and Acer's demand is something we have had to handle carefully, and adjust our strategy to business IoT solutions for smart cities and Industry 4.0 throughout 2019. With smart connection as the foundation, the smart solutions include agriculture monitoring stations, water quality monitoring, water meter, street lighting, air pollution detec- keep more stock on hand. It will be an ongoing challenge as the next generation of CPUs are launched and potentially create more tion, and such, providing a variety of choices for more efficient and effective business IoT applications. mismatch issues. There are great opportunities arising from the rapid emergence of the gaming ecosystem with diversified business models and in- 5.1.1.4 Long and Short Term Business Plan novative applications. The esports total audience, which stood at 443 million in 2019, is expected to grow by 11.7% to 495 million and surpass US$1 billion in revenues in 2020 (Source: 2020 Global Esports Market Report, Newzoo). This expectation is substanti- Acer is engaging in dual transformation with its core business and new initiatives. In its core business, Acer will continue to optimize ated by a separate report that states that by 2020 more people will watch an esports final than MLB or NBA finals (Source: Syracuse the foundations of existing product lines and innovations, along with the development of software applications, integrating cloud University, January 18, 2019). platforms and cloud services. Under this market condition, Acer will continue to focus on high-growth segments, such as thin-and-light notebooks, gaming In new initiatives, Acer is expanding its business boundaries and aims to identify and incubate micro trends, followed by the scale PCs, Chromebooks, in addition to the new and powerful ConceptD line of desktop, notebooks and monitors launched in 2019 for up of feasible technologies, to ultimately create multiple growth engines for the company's future. creators. ConceptD's powerful yet quiet operation and high color accuracy are made for creators such as graphic designers, film- Short Term Plan: makers, engineers, architects, and developers. In addition, Acer unveiled Planet9, an open community platform for gamers that allows them to build their team, train, and challenge for victory. In core business, Acer will continue to optimize its PC business by focusing on thin-and-light notebook innovations, designing high-end and powerful products for creators' needs with the ConceptD line, and creating a complete gaming ecosystem from In 2019, Acer gaming PCs' growth of 14% exceeded the industry growth of 8%. It ranked No. 1 for gaming PCs in 8 countries and hardware to events to social platform for a comprehensive esports experience. At the same time, Acer is constantly observing the for gaming notebooks in 10 countries. Year-on-year growths for Acer were significant with 17% in gaming notebooks and 14% in changes of the global economy and taking measures as necessary to minimize impacts and maintain operational growth. In new gaming monitors. Notably, in Q4 2019 Acer rounded out the year with 23% year-on-year growth in gaming notebooks. businesses, in addition to the existing stock listing of its subsidiary AOPEN, in 2019 two subsidiaries became publicly traded: Acer Cyber Security became listed on the Taipei Exchange, Acer Synergy Tech became listed on the emerging market of the Taipei Ex- In the year ahead, the company will continue to observe users' needs and identify micro-trends that have the potential to create change. In March 2020, Weblink International became listed on the emerging market of the Taipei Exchange. a new blue ocean of opportunities. In parallel to focusing on its core PC products, Acer will persist in developing multiple growth Long Term Plan: engines, and integrate “software + hardware + services” as a forward-looking company. Acer continues to research and develop customer-centric products, and explore beyond boundaries to identify and incubate micro trends that have potential for growth. Its strategy is to list more new businesses to create a fleet of growth engines. In both its core PC and new business developments, Acer seeks for long-term sustainability. This includes applying the Responsible Business Al- 3. Competitive Advantage liance (RBA) Code of Conduct as the standard to ensure responsible sourcing of materials, and compliant working environments Acer continues to engage in a dual transformation of its core business and new initiatives. Underscoring the importance the com- that uphold human rights. It demonstrates Acer's commitment to environmental protection, social responsibility, while carrying pany places on research and development, in 2019 Acer ranked No. 2 in Taiwan patent applications with 565 filings for design. out its dual transformation of operations. In addition, its R&D takes into account of the design thinking process and key technologies, creating a competitive advantage for More information may be found in Chapter 6: Corporate Social Responsibility the company and resulting in the launch of numerous highly competitive and innovative products. In new business developments, Acer has shifted away from traditional computer hardware manufacturers' mindset. Its Value Lab has gradually invested more resources in developing artificial intelligence, big data and more, while exploring new business models to create opportunities for 5.1.2 Market Highlights growth. Acer also has a number of subsidiaries in diverse scopes of business including information security, smart transportation, servers, digital signage solutions, and these are just some examples of the multiple growth engines. Several of these engines have 5.1.2.1 Market Analysis made progress to becoming listed companies. In 2019, Acer Cyber Security became listed on the Taipei Exchange, and Acer Synergy Tech became listed on the emerging market of the Taipei Exchange. 1. Market Share of PC Products In terms of sales channel reach, Acer has a presence in over 160 countries and a lean organization for effective and fast decision Acer's 2019 revenue breakdown by regional operations were: Pan Asia Pacific with 40% share, EMEA with 33% share, and Pan making. Its R&D, design, marketing, sales, and services all adopt a global strategy, which is the company's advantage. America with 27% share. In worldwide PC shipments (Source: IDC), Acer ranked No. 5 for total PCs with 6% share, No. 5 for note- books with 8% share, and No. 4 for desktops with 3% share. 80 81


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    Acer Incorporated 2019 Annual Report Acer’s Business Formula 4. Advantages, Disadvantages and Counter Measures (11) Digital signage solutions (12) Cyber security and datacenter Advantages (13) Esports platform (1) The traditional PC market is stagnating, segmentation of the market has become the mainstream. Acer focuses on PCs in the areas of thin-and-light, gaming, creators, Chromebooks, and more, for different users' needs. Market segments are further divided to address specific users, for example, gaming PCs for hardcore and casual gamers. 2.Manufacturing process (2) Consistent marketing activities for high-profile brand and products, such as the Predator brand and Predator Thronos gaming Acer and its subsidiaries outsource all manufacturing, and are not directly involved in the manufacturing processes. However, to chair, have helped to build the company's brand awareness. This is proven by the rise of average selling price by 5% in 2019 fulfill its responsibilities as a corporate citizen, and to support global standards in strictly controlling the use of harmful environ- demonstrating its gain in brand premium. mental substances, the company released the “Guidelines for the Control of Restricted Substances”, which suppliers required to (3) Facing the rapidly changing market dynamics, innovation and entrepreneurship pave the way to the future. Acer ranked No. 2 adhere to in the restriction of harmful substances including chemicals. Since July 1, 2006, all Acer products have complied with in Taiwan patent applications with 565 filings, reflecting its competitive edge in design and innovation. the European Union's Restriction of Hazardous Substances (RoHS). In addition, the company's products are designed to reduce (4) With a presence in over 160 countries, Acer has a comprehensive network of sales channels, and a lean organization for effec- environmental impact from stages from design, packaging, transportation, usage, through to recycling for the goal of reducing tive and fast decision making. harmful impacts on the environment. For example, in 2019, Acer achieved 100% use of recycled paper for its products, saving the earth's resources. (5) Acer has expanded beyond the PC market to new businesses that make up its multiple business engines to ensure the long- term sustainability of the company. (6) Corporate social responsibilities: Acer and its subsidiaries adhere to the brand spirit of “innovative caring.” The three key pillars of CSR are sustainable operations, financial transparency, and caring for the environment, while keeping a balance of 5.1.3 Production Process of Key Products stakeholders and company interests, lifting the brand image of Acer as a whole. Acer has long-term cooperation with reputable firms, in and out of Taiwan, for the supply for raw materials. In addition, the com- pany joined the Electronic Industry Citizenship Coalition in 1997, which later became the Responsible Business Alliance (RBA), Disadvantages and Countermeasures: and continues to be an active participant in the organization's actions. The company strictly prohibits suppliers from using com- (1) The volatile and rapidly changing ICT industry presents a challenge to forecast the future PC demand with accuracy. ponents and finished products produced with raw materials obtained illegally or via inhumane ways; or purchasing tantalum, tin, tungsten and gold (known as 3TG) from sources with direct or indirect funding or benefits from armed groups of the Congo or Actions: Continue to adopt “dual transformation” as the core strategy, explore different markets and launch products for dif- neighboring countries. Acer also updated the “Responsible Raw Materials Purchasing Policy” in 2017 by expanding the scope of ferent applications, identify micro trends for a blue ocean of opportunities. In addition to core PC businesses, fulfill mineral management beyond 3TG and Congo to ensure minerals management is consistent with the OECD's guidance for mineral the needs of more user groups and market segments; Acer is expanding its offering to smart wearable devices, smart supply chains in conflict-affected and high-risk areas. The company requires suppliers to provide mineral procurement policies parking solutions, information security and others, to discover new opportunities. With issues such as global trade and processes, take due diligence process, and shoulder the responsibility of social and environmental protection. and tax, Acer has been considering various locations for outsourced productions besides China. (2) Market volatility may result in greatly fluctuating demands. Since 2016, the company has expanded its supplier responsibility management to the second-tier supplier (i.e. the supplier of sup- Actions: Acer and its subsidiaries will continue to adopt the channel business model and strengthen cooperation with key pliers), and plans to expand to third-tier suppliers in 2021 to promote a positive cycle for sustainable future. suppliers and distributors, while continuously monitoring market demands and new trends. In addition, e-commerce sales models have been adopted to directly serve consumers and understand their preferences. 5.1.4 Key Buyers and Suppliers Accounting Over 10% of To- 5.1.2.2 Key Products and Manufacturing Process tal Net Sales and Purchase: 1.Current product and service offering (1) Key Buyers for Acer Group: None (1) Notebook PCs (2) Key Suppliers for Acer Group (2) Desktop PCs Unit: NTD Thousands (3) LCD monitors (4) Projectors Year 2018 Year 2019 Item Percentage Relationship Percentage Relationship (5) Gaming From Amount of total net with Acer From Amount of total net with Acer Inc. purchase (%) Inc. purchase (%) (6) Gadgets 1 Supplier A 27,032,448 16.81 None Supplier A 26,806,178 17.71 None (7) Servers 2 Supplier C 26,096,605 16.22 None Supplier C 22,440,788 14.82 None (8) Cloud services 3 Supplier D 22,443,623 13.95 None Supplier D 20,993,426 13.87 None Others 85,303,623 53.02 Others 81,155,242 53.60 (9) E-business and services Total Net Purchase 160,876,299 100.00 Total Net Purchase 151,395,634 100.00 (10) Commercial solutions Note: The key suppliers are not significant change for 2019. 82 83


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    Acer Incorporated 2019 Annual Report Acer’s Business Formula 5.1.5 Production Value in the Last Two Years: 5.2.2 Transforming with effective strategies Acer diligently builds on the synergy of partnerships and resources to effectively operate and grow its business. With a creative Not applicable. marketing mindset, the global headquarters works closely with regional offices to understand local market conditions and cus- tomers preferences. 5.1.6 The Sales Value in the Last Two Years: Unit: NTD Thousands Year 2018 2019 5.3 Employees Major production Domestic Sales Foreign Sales Domestic Sales Foreign Sales Computer 6,801,548 176,159,653 6,761,776 165,656,209 Peripherals & Others 24,090,391 35,218,814 25,997,577 35,869,792 5.3.1 Global Human Asset Management Total 30,891,939 211,378,467 32,759,353 201,526,001 Employees are the Company's key assets and the main driver of business growth. Acer has fostered a work environment that em- powers employees by entrusting them with the tasks matched to their skill or qualification. There are clear objectives and reward for achievement, extensive communication and interaction among coworkers, constant encouragement for innovations, and an effective decision making process. On-the-job training provides the ideal platform for learning and development. As a result of employees' joint effort, Acer has received numerous industry and media recognition. For example, Acer has been 5.2 Keys to a Sustainable Future listed on the DJSI Sustainability Indices (Emerging Markets Index) for the sixth consecutive year since 2014. Besides, Acer spent NT$2.57 billion on research and development in 2019 and ranked No. 2 in Taiwan patent applications with 565 filings. With the commitment in designing for customer needs, Acer has received many international awards for design excellence in 2019 such as 5.2.1 Focus on competitive IT products with high growth in- Good Design Award of Japan, Red Dot Award of Germany: Brand, Red Dot Award of Germany: Product Design, Computex design and innovation award, iF Product Design Award of Germany, CES Innovation Award. All above results are contributed by our most cluding the gaming PC market valuable assets: our employees Acer continues to pursue business growth and expansion, and upholds the following business philosophy and strategies: -Human Asset Analysis by Manpower, Average Age and Years of Employment Combining the strength and scale of its core products business with the innovation and integration capabilities of new businesses, Date End of 2018 End of 2019 March of 2020 Acer is transforming into a “hardware + software + services” company. In addition, Acer is reinforcing its core competencies: entre- Category preneurship, innovation, talent cultivation and brand value, and aims to deepen the qualities of “trust”, “innovation” and “excel- Manpower 7,338 7,240 7,232 lence” associated with the Acer brand. The company will continue to push for operational growth through an efficient mix of peo- Average Age 39.6 40.0 40.2 ple-centric products with unique designs and innovative technologies with high growth potential and address the market needs. Average Years of Employment 8.4 8.7 8.8 Acer's long term commitment to innovation, from PCs to gaming and the creator line, provides consumers with a variety of choices Male (%) 62.8% 62.5% 62.4% to meet their needs. In the gaming market, it has expanded from the research and development of hardware to esports events and Female (%) 37.2% 37.5% 37.6% gaming social platform. Acer has taken part in international esports events and hosted its own Asia Pacific Predator League tour- nament, in addition to unveiling Planet9, the next generation esports social platform that integrates esports platform features for -Human Asset Analysis by Job Function gamers to enhance their skills. The gaming and creator lines of powerful devices feature advanced thermal cooling technologies Date and sophisticated designs, such as the new Predator Thronos Air gaming chair, and the timeless design of the ConceptD series for End of 2018 End of 2019 March of 2020 Job Function creators with powerful yet quiet operation required for their creativity flow. Acer will continue to engage new audiences with game- General Management 202 179 178 changing designs first to market. Sales & Product Marketing 2,233 2,146 2,094 In the PC market, Acer seeks to focus on segments with high growth potential; such as thin-and-light notebooks, Chromebooks, Customer Service 1,831 1,782 1,769 and displays, where Acer has delivered many award-winning innovations. Research & Development 1,172 1,202 1,228 Sales Support 957 988 1,030 Administration 943 943 933 Total 7,338 7,240 7,232 84 85


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    Acer Incorporated 2019 Annual Report Acer’s Business Formula - Human Asset Analysis by Education Level Multiple Approaches of Learning and Development Date End of 2018 End of 2019 March of 2020 Each employee was provided with multiple development paths to enhance the profession--- for example, from company within, Education Level Doctor of Philosophy 1.8% 1.6% 1.6% such opportunities can be found as on-the-job trainings, coaching, job rotations, forums, online learnings. For the company out- side, they included profession seminars, short-term intensive training hosted by the prestigious universities or training institu- Master's Degree 28.0% 28.8% 28.6% tions. Bachelor's Degree 42.0% 43.3% 43.8% Vocational Study 26.1% 24.2% 24.0% Senior High School or below 2.1% 2.1% 2.0% Total 100.0% 100.0% 100.0% Management Systems 5.3.2 Recruitment 1. Managerial Training The Company abides to each country's labor laws and customs. We are committed to providing equal opportunities and following (1) Management Training for First-Level Anti-discrimination law that it is illegal to make employment decisions based on legally protected factors like race, class, language, In order to help the managers at supervisor level to enhance people management skills, we have held 8 batches of the training thought, religion, political party, place of origin, place of birth, gender, gender orientation, age, marital status, appearance, facial since 2018. The training had two phases— Phase 1 was positioned to assist supervisors to develop the skills of management features, disability, or past membership in any labor union, and we are sticking to the principle of putting the right people at the communication, performance management, and coaching, aiming to boost the efficiency of team collaboration in creating right position. Acer seeks high-potential candidates with multi-disciplinary backgrounds in order to build a strong global work- values; Phase 2 was to guide the managers to specialize in such management skills as target selection, goal setting, how to force. motivate and retain talents, and performance evaluation. (2) Leadership Training for Mid- Level 5.3.3 Continuing Learning and Growth Starting 2019, we redesigned our leadership training, and requested the mid-level managers to attend the training, which covered the effective ways of inspiring trust, creating vision, executing strategy, and coaching potentials. People Development and Career Growth (3) Executives Training The company's training policy in 2019 was set to be aligned with the corporate strategy, which was to optimize the operations of In making persistent efforts to incubate the future leaders in Acer's Group, in 2019 we held the trainings concentrating on core business and new business for advancing the group's overall effectiveness. corporate governance, business judgment, and business operation. The trainings in 2019 contained the topics about “How to Review and Interpret the Implications of the Business Reports in the Perspective of Business Dynamics”; “How to Act As A By the policy's guidance, the training and development was to equip the employees with the capabilities to stay on top of cutting- Competent A Spokesman to Deal with Media”, and “IPO Strategy Formulation and Implementation”. edge trends, explore technology with business opportunities, and enhance the efficiency of digital marketing. All of the efforts were directed to strengthen the consolidation of hardware, software, and service, create value, boost profitability, and ultimately, improve brand premium. 2. Professional Training For management training, we helped the supervisory-level managers to acquire the essential people management competencies; The flagship training program for professional development in 2019 was a series of Product Manager training, enabling all of while the leadership training guided the mid-level managers to develop strategic thinking and leadership capabilities. the colleagues involved with the product development and operation to understand the core knowledge of PM, the workflows of multiple functions, and the protocols of cross-department collaboration. The Program is intended to shorten the learning curves In terms of profession development training, we delivered the core essential trainings to the line product managers, enhancing the through detailed lectures and effective business practices. The training consisted of 18 modules based on the chained operation, capabilities of the product development team in more systematic and strict manner. In addition, we continued to hold a series of covering CPU, BIOS, design quality, quality control, mechanical engineering, customer services, software and hardware, supply trend analysis forums, aiming to help the product development teams to understand the end-users' requirements and the indus- chain, marketing, and branding management, etc. Case studies, simulation and group projects were employed throughout these trial development trends, so as to apply these insights to the new product development or solutions provided. trainings to ensure the learning effectiveness. As for general education and training, we guided employees to use technology to maximize operation efficiency. By strengthening In 2019, the multiple teams of senior analysts from the Institute for Information Industry of Taiwan were invited to share the in- a full range of essential skills and the awareness of corporate responsibilities, we built up the competitiveness of the organization sights on the consumers and marketing trends with RD and PM teams. The topics for 2019 included: The Business Innovations in continuously. the AIoT Epoch; The trend of Gaming NB; Forecast the Emerging AI Products from the Observations of CES; The Trending Applica- To ensure the quality implementation of such training, all trainings were conducted in accordance with the "Management Process tions of 3D Sensors; Edge AI’s Trend; and Examining the Future of Gaming Products in the Perspectives of Gaming Players. of Internal and External Training." In 2019, a global total of 39,911 attendees participated in trainings, accounting for 103,436 man-hours. The averaged training hours reached up to 13.23 per person. All trainings were done in accordance with the principles of operational necessity, gender equality, and equal opportunity. 86 87


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    Acer Incorporated 2019 Annual Report Acer’s Business Formula 3. General Training 5.3.5 Welfare The general education and training in 2019 focused on three key areas: The Company shall abide by the labor laws of local governments and also conform to social norms. By sticking to these principles, (1) Learned about how to use new IT technology to improve business efficiency, such as Make Business Intelligence Reports, and we strived to provide the comfortable working environment, attractive welfare programs, candid communication ways to enhance Conduct Data Analysis using MS-Excel. productivity and creativity. Taking Taiwan for example, Acer has established a welfare committee that initiated activities for em- (2) For the essential skills and awareness of corporate social responsibility, we have held the training of IP Protection, Antitrust ployees' welfare. For the past years of activities, they included company trips, sports competition activities, Acer Family Days, arts Compliance, Labor Health and Safety, and Information Security, etc. appreciation events, speeches for enriching employee's life, celebrations for upcoming holidays, social clubs, gift vouchers, edu- cational grants, subsidies covering wedding, funerals, or hospitalization. In addition, we also have established the fitness center, (3) ConceptD was a new premium brand dedicated to creators, with a complete product line to fulfill different needs of creators recreation and leisure facilities to help the employees to release employees' pressure after work, and besides, we rolled-out the in various fields. To ensure all Acer employees to have a proper understanding of the ConceptD brand, we have rolled-out the health-promotion programs to keep a well-balanced life. eLearning programs in 2019, introducing the brand position, design concept, and feature of the products. We also had “Execu- tive Talks” share visions and missions of ConceptD in the eLearning, to stimulate the passion and encourage the all employees dedication to ConceptD. 5.3.6 Pension 4. New Employee Orientation Training The Company abides to each country's labor laws and customs. Taking Taiwan for example, Acer conforms to the Labor Standards On their first day of work, new staff were given orientation training to help them quickly to grip with the Company's basic operating Act and Labor Pension Act by contributing a portion of employees' salaries toward a pension scheme. Besides, employees who have processes. Within their first month, new staff were put through training to better understand the company's mechanisms, regula- served for 15 years and have reached 50 years of age can apply for early retirement. tions, core values, brand values, corporate culture, and the Standards of Business Conduct (including instruction on labor rights, freedom of expression, individual privacy rights, sexual harassment prevention, and corruption prevention), thus helping them become fully integrated parts of the team. New staff working in product-related positions also received training on patent protection, CSR (including green products, EICC, 5.3.7 Employee Relations and greenhouse gasses), and electrostatic discharge (ESD). We also actively encourage staff to take training in CPR and automated Acer respects employees' opinions and is dedicated to maintaining a harmonious relations between managers and their team external defibrillator (AED) use. members. We obey the business laws and follow the practices of each local authority around the world. And in the past two years, we had no loss resulting from labor disputes. Acer offered multiple channels for interaction in order to improve two-way communication: 5. Performance Management and Development • A Dedicated Hotline: A hotline for each supporting function has been set up for employees to express their concerns or issues. The goal of Acer's performance management and development system is to improve performance at individual, departmental and With the channel of expression, we can take essential actions to solve the problems in more efficient way. organizational levels, and includes goal setting, delegation, communication & coaching, the link between performance & remu- neration, and career development. • Open and Candid Communication Channels: Employees may report issues to their immediate supervisors or higher authori- ties for seeking solutions. Furthermore, the Chairman & CEO hosted the face-to-face meetings, where the top level leaders attended and had direct communication with employee representatives coming from each office site on a quarterly basis. To ensure the resolution that can be carried out, the authority-in- charge followed up the improvement progress at the next quar- 5.3.4 Compensation terly meeting. For the meeting minutes, they were publicized on the Company Intranet for all employees' attention.The Chair- man & CEO also hold face-to-face communication meetings to deliver new vision, strategies, and action plans, so as to assure Acer provides a competitive salary package to attract and retain high-potential human assets. The Company surveys global IT the general staff have a clear understanding of communication messages. companies' salary levels annually, to ensure that our salary packages are adjusted accordingly and reasonably to reflect market conditions. On top of the monthly salary, the Company offers the bonuses that are differentiated from the performance of busi- • Communications on the results achieved: With the multiple growth engines being created for maximizing Acer's market cap, ness unit and each individual. Taking Taiwan for example, in addition to the fixed monthly salary and festival bonuses, Acer offers we emphasized the internal communication to better collaboration. We expected all of our employees to strive together based incentives that reward new innovations, intellectual property rights, sales achievements, performance bonus and profit sharing. on shared vision, belief, and core values to ensure the ultimate goals of dual transformation successful. The communication meetings ‘Engaging with Jason' was held periodically. In these meetings, the Chairman & CEO commu- nicated the achieved results and future development directions, and responded to the questions that employees raised. In addition, Chairman & CEO traveled to the business sites around the globe to explain the company's latest policies and do face- to-face communications with employees. 88 89

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