Composition and Roles of the Board of Directors

Coway’s Board of Directors consists of 7 directors: 1 Executive Director, 2 Non-Executive Directors and 4 Independent Directors. There are 3 sub-committees under the board including Management Committee, Audit Committee and Independent Director Nomination Committee. Our directors are appointed through the general meeting of shareholders based on their expertise in the field under the applicable rules and regulations.

Board Members

• (As of March 2018)

Operation of the Board of Directors

The Board of Directors oversees the performance of important duties and responsibilities of our directors by resolving matters stipulated in the laws and ordinances, the articles of incorporation, matters delegated by the general meeting of shareholders, general policies on business management. The Board of Directors Meeting is held on a quarterly basis while additional meetings are held whenever required. The resolutions of the Board of Directors are based on the majority of the directors present and directors with special interests in the agenda are not allowed to exercise their voting rights. In 2017, a total of eight board meetings were held covering 32 key issues including annual business plans, budgets, quarterly dividend, and stock options.

• Independence of BoD

  We appoint directors based on recommendations from board and resolutions made by the general meeting of shareholders and no separate nomination committee is established.

  We notify and announce the names and information about the candidates if they are selected prior to the general meeting of shareholders

• Independence of Audit Committee

  We established the Audit Committee through the general meeting of shareholders held in March 2018 in accordance with the large corporation system applied as of the end of 2017.

  The Audit Committee consists of independent directors including accounting and financial professionals elected by a resolution of the general meeting of shareholders.

  The submission of relevant documents and records may be required if necessary.

• Expertise and Diversity of BoD

  We are committed to implementing the diversity and expertise of its governance

  Our independent directors are selected based on their expertise and experience in the fields of business management, economics, law and technology.

  Our internal organization assists independent directors to perform their duties as members of the Board of Directors.

  We keep board members informed of agenda prior to the board meetings and hold a briefing session if necessary.

• Board efficiency

  Board Meeting Attendance

  Article 39 (Composition of the Board of Directors and Meeting)

  ②The Board of Directors Meeting shall be summoned through notification in writing or electronic format, or verbal messages sent by CEO or any designated director at least 3 days prior to the meeting date. However, the summoning procedure may be skipped if agreed unanimously by the directors.

  Board Mandates

  Independent Directors: The Commercial Act applies to the appointment of outside directors in terms of subsidiary duty.

  Board Performance Review

  Article 43 (Compensation & Retirement Pay)

  ①The limits on the compensation for directors shall be determined by the resolutions made at the General Meeting of Shareholders.

  ②The retirement pay for directors shall be determined by the Retirement Pay Policy for Executive Officers.

  Board Election Process

  Article 32 (Appointment of Directors)

  ①Directors shall be appointed at the General Meeting of Shareholders.

  Article 32-2 (Nomination of Independent Directors)

  ①The Independent Director Nomination Committee shall nominate qualified persons for as Independent directors pursuant to the Commercial Act and other applicable laws and regulations.

  ②Matters related to nomination and review of qualifications shall be determined at the Independent Director Nomination Committee Meeting.

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Board of Directors Resolutions (2017)

Annual business plans and budgets for 2017

Report on the auditor's compliance with internal accounting rules

Stock options to executive officers

Dividend for Q1-Q3 of 2017

Review of risk hedging for currency fluctuations

Report of major achievements in sustainability management in 2016-2017

Committees within the Board of Directors

We have established committees within the Board of Directors (BoD) to increase the efficiency of business management. In particular, the Audit Committee and the Independent Director Nomination Committee were organized in order to enhance our accounting practice and nominate candidates for independent directors in 2018. They are expected to further protect the rights and benefits of our shareholders and ensure transparency in our business practice.

Committees within the Board of Directors Information

Committee	Composition	Directors
Management Committee	1 Executive Director, 2 Non-Executive Directors	Hae-Sun Lee, Jay H. Bu, Tae-Hyun Park
Audit Committee	3 Independent Directors	Ki-Seok Yu, Joong-Seek Lee, Joon-Ho Lee
Independent Director Nomination Committee	2 Independent Directors, 2 Non-Executive Directors	Joong-Seek Lee, Joon-Ho Lee, Tae-Hyun Park

As a decision-making body on small-scale investment and other matters organized by the CEO, the Management Committee is composed of 3 directors (1 Executive Director and 2 Non-executive Directors) including the CEO for efficient operation and prompt decision-making. In 2017, there were 35 resolutions made on reorganization, advertising budget execution, incentives for employees and executive officers, HR system revision (evaluation/promotion, job group), and financing a subsidiary in Thailand.

Key Decision-making Process

Performance Evaluation and Remuneration

On an annual basis, we evaluate and discuss our directors' expertise in business and technology and participation in the board activities at the meeting. Remuneration for the board activities of is determined based on the KPI and short-term performance incentive standards. The total amount of remuneration1) paid in 2017 was KRW 845,645,000 with KRW 211,411,000 per person in average.

Performance Evaluation and Remuneration Information

Category	No. of Persons	Total Remuneration (Unit: KRW 1,000)	Remuneration per Person (Unit KRW 1,000)
Registered Director	1	470,510	470,510
Independent Director	2	56,400	28,200
Auditor	1	318,735	318,735

• 1)Only the registered director and the outside director are paid