SK hynix : 2025 Corporate Governance Report

About this update from Sk Hynix Inc.

SK hynix (A000440) Details of Corporate Governance Report Date : 202G-08-28 1G:23 Details of Corporate Governance Report [000001] Corporate Governance Report Corporate governance report document [000002] I. Company Overview Company name SK hynix Inc. ("the Company") Period subject to disclosure and report generation date: Start date of the period subject to disclosure 2025-01-01 End date of the period subject to disclosure 2025-12-31 Report generation date 2025-12-31 2-1. Fiscal periods from the current year to the year before last Category Current year Previous year Year before last Start date 2025-01-01 2024-01-01 2023-01-01 End date 2025-12-31 2024-12-31 2023-12-31 Persons preparing Corporate Governance Report Person in Charge of Disclosure Working-level staff in charge Name : Kim Woo Hyun Name : Seo Eun Seok Position : Vice President Position : TL Department : Finance Department : IR Phone number : 031-5185-4114 Phone number : 031-5185-4114 E-mail : [email protected] E-mail : [email protected] Table 1-0-0: Company Overview Largest shareholder, etc. SK square and 9 persons with special i nterests Share percentage of largest shareholder, etc.(%) 20.07 Share percentage of minority shareholders(%) G3.34 Business type (Financial/Non-financial) 비금융(Non-financial) Major products Memory semiconductor products such as DRAM, NAND, MCP (Multi-Chip Pack age), etc., and Non-memory semicond uctor products such as foundry, etc. Business group as per the Monopoly Regulation and Fair Trade Act ("Fair Trade Act") O Subject to the Act on the Management of Public Institutions X Business group name SK Summary of Financial Status (Unit: KRW 1 million) Category Current year Previous year Year before last (Consolidated) Revenue 97,14G,G75 GG,192,9G0 32,7G5,719 (Consolidated) Operating income 47,20G,319 23,4G7,319 -7,730,313 (Consolidated) Net income 42,947,902 19,79G,902 -9,137,547 (Consolidated) Total assets 17G,107,G59 119,855,209 100,330,1G5 (Non-consolidated) Total assets 1G8,903,929 112,412,580 92,949,387 [000003] Compliance Status with Key Indicators of Corporate Governance Compliance rate 80 Compliance with Key Governance Indicators Key indicators (Current Period Subject to Disclosure) Compliance (O/X) (Previous Period Subject to Disclosure) Compliance (O/X) Note Give a convocation notice 4 weeks before the general meetings of shareholders (Annual General Meetings, AGM) O O Use an e-voting system O O Hold the AGM on the date other than the dates during the popular AGM period X X (Note 1) Provide predictability of cash dividends O O Notify shareholders of the dividend policy and payout plans at least once a year O O Established and operate a CEO succession policy O O Build and operate an internal control policy such as risk management O O The chairperson of the Board is an outside director O O Use a cumulative voting system X X (Note 2) Have a policy to prevent the appointment of a person as an executive who is accountable for harming corporate value or infringing on the shareholders' rights and interests X X (Note 3) Not all Board members are of the same gender O O Installed an independent internal auditing department (that supports an internal audit procedure) O O A specialist in accounting or finance is included in internal auditing bodies O O Internal auditing bodies hold meetings with external auditors at least once a quarter without management present O O Procedures are in place to allow internal auditing bodies access to material management information O O (Note 1) The Company held the 78th AGM on March 25th, 202G. AGM concentration dates of 202G are March 25th, 27th, and 30th. (Note 2) Refer to Sub-principle 4-3 C. of the Report. (Note 3) Refer to Sub-principle 4-4 A. (3) of the Report. [000004] II. Corporate Governance Status [100000] 1. General Corporate Governance Policy Provide a detailed explanation of the operating direction and key considerations of the company's corporate governance policy. The Company believes that transparent and sound governance serves as a basis for reasonable and responsible business activities and wins th e trust of all stakeholders. The Company also believes that it forms the foundation for a sustainable enterprise that generates both economic a nd social value over the long term. As such, the Company has established and seeks to maintain a sound governance structure to not only ensu re continued stability and prosperity of its operations but also generate value for its customers, employees, and shareholders, serving as a cruc ial driver of social and economic growth and contributing to the wellbeing of broader humanity. The Board of Directors (the "Board") of SK hynix, the Company's highest decision making body, sets the Company's key business objectives an d basic policies while monitoring execution by top management. For the effective performance of its duties, the majority of the Company's Boa rd is comprised of independent directors with diverse backgrounds and areas of expertise. Such independent directors utilize their professiona l knowledge to review the procedural and actual legitimacy of various business activities including management decisions, thereby playing a c rucial role in ensuring the soundness of the Company's operations. Describe unique characteristics of the company's governance, if any. Composition of an independent board of directors As of the date of submission, the Company's Board is currently composed of ten directors (two executive directors, six independent directors, a nd two other non-executive directors) with independent directors comprising more than a majority (G0%) of the Board. All independent direct ors are independent in that they have no special relationship with company management, and without the approval of the Board, no indepen dent director can effectuate for his own account or for the account of a third person any transaction which falls within the same line of busines s as the Company or become a general partner or a director of any other company whose business purposes are the same as those of the Com pany, in order to prevent conflict of interests under the Commercial Act and the Board Regulations. The Company strives to ensure that its Boar d is led by independent directors whose independence and expertise have been vetted, that the Board effectively monitors and keeps manage ment's executive rights in check, and that balance is thus maintained in the Company's operations. Meanwhile, the Company has separated th e Representative Director (CEO) and Board Chair positions and by appointing an independent director as the Board Chair, has further strength ened the Board's independence and its oversight and check and balance over management. Enhancement of the Board's Expertise The Company's Board includes directors with diverse backgrounds and areas of expertise, which raises the Board's professionalism and allows it to perform effective checks on management. To ensure fair representation of various stakeholders, directors are appointed among professio nals experienced in a wide range of fields, from business, financial management, accounting, banking and finance, legal, semiconductor techn ology without disproportionate concentration on a particular background. The Audit Committee is composed of four independent directors, in cluding three experts with experience in finance, accounting, or financial management. The Sustainability Committee is operated to enhance s hareholder value through ESG while considering a broader perspective that accounts for the Company's social value creation activities and the viewpoints and demands of various stakeholders. The Company also offers detailed orientation courses for newly appointed independent dire ctors to build their understanding of the Company and the broader semiconductor industry, with an aim to enhance the professionalism and c ompetitiveness of the Board as a whole. In addition, regular workshops on ICT industry trends, semiconductor insights, ESG, and other various topics are held to continuously engage Directors to contemplate and discuss current issues and management strategies pertaining to the Com pany. In particular, the Company strives to strengthen the competency of the Audit Committee by providing various forms of internal and exter nal training on auditing, including those provided by external experts. Operation of the Council of Independent Directors The Company operates a council of independent directors consisting only of independent directors. At the council meeting, independent direc tors review the agenda for the Board meeting in advance and discuss items to actively express their opinions, thereby ensuring greater indepe ndence and rationality in the Board's decision making process, which leads to a greater substance in the Board's operations. Enhanced management oversight through operation of diverse committees The Company is striving to enable the Board to perform its supervision and checks and balances over management in its capacity as the top de cision making body and as part of that the Company operates expert committees. The Sustainability Committee was established in 2018 to revi ew the strategies and results in achieving the Company's sustainable management philosophy. The Compensation Committee was charged wit h expanded functions in 2021 to include HR deliberations in addition to the remuneration of Directors and management. Internal organization Number of Independen t directors Number of total direct ors Board Chair/ Head of Committee Whether the Chair is indep endent direct or (O/X) Key Roles Board of Directors G 10 Ko, Seung Beom O Resolutions on matters prescribed by laws and regulations and articl es of incorporation, as well as issues deemed crucial for company operations Oversight of directors' and management's execution Audit Committee 4 4 Yang, Dong Hoon O Accounting audit and business inspection Deliberation on massive internal transactions by the appointment of an independent auditor and delegation of the Board of Directors Independent Director Nomination Committee 3 3 Jeong, Deog Kyoon O - Recommendation, review, and selection of outside director candidates Sustainability Commi ttee 3 5 Kim, Zeong Won O Deliberation on the company's Compliance Management system an d activities including antitrust, anti-corruption, SHE, and subcontracting Deliberation on strategies and activities related to ESG and sustainab le management Compensation Com mittee 3 4 Jeong, Deog Kyoon O Deliberation on the director compensation limits and stock options for the management Specific remuneration for executive directors Deliberation on CEO evaluation and compensation Deliberation on inside director candidates * As of the date of submission

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