People
The People
Grade: B. Nextronics is a tightly-held, founder-run Taiwan small-cap where the Chairman and CEO have nearly three decades of joint history, meaningful — though not dominant — economic skin in the game, and a board that ticks every Taipei Exchange box without obviously being able to override them. Pay is modest in absolute dollars, but as a percentage of after-tax profit it jumped from 36% to 50% the moment earnings dipped, and a wholesale replacement of independent directors in 2023 reset audit-committee tenure to zero years. There are no scandals, no pledged founder shares, no abusive related-party fingerprints — just a controlled company whose checks are formal rather than real.
| Governance Grade | Skin-in-the-Game (1–10) | Founder-Aligned Stake | CEO Tenure (years) |
|---|---|---|---|
| B | 7 | 13% | 17 |
The People Running This Company
Two men matter. Chairman Stephen Hsu (徐季麟) has been on the board since the 1980s and Chairman since the mid-1990s; CEO Kevin Chen (陳言成) has been on the board since 2008 and was promoted to CEO in late 2008. They jointly control the family holding company Hongyi Precision (鴻乙精密) — Hsu owns 36.82% of Hongyi, Chen owns 41.50% — which in turn holds a 5.54% board seat in Nextronics. After their direct stakes (4.99% for Hsu including spouse, 2.75% for Chen including spouse), the founder bloc controls roughly 13% of the listed company. Operating VPs — Lai Qi-Xian (sales), Su Hou-An (CTO/R&D), Hsu Chih-Hsiung (operations) and Liu Wei-Hao (spokesperson/IR) — are all long-tenured insiders, with Hou An Su credited as CTO since 2013 and Lai now serving as Hongyi's board representative inside Nextronics.
The two things to notice. First, the operational depth chart is thin — six named executives total, with the CTO doing nearly two decades and no obvious successor visible outside the founding bloc. Second, the only person on the team with a non-Taiwanese-connector pedigree is the Sinbon-appointed director, not a member of operating management. If Hsu or Chen step back, this is a continuity question, not just a leadership question.
Succession watch. Chairman Hsu is in the 60–65 age band and has held the chair for ~28 years; no internal successor is identified in the disclosed leadership table. Hongyi Precision — the founders' family holdco — is the institutional vehicle through which control would pass.
What They Get Paid
Top-six executive pay totalled NT$25.5 million on a consolidated basis in FY2023; the full seven-director board took NT$18.0 million. Combined, that's NT$43.5M against NT$83.1M of net income — a headline 50% of profit versus 36% the year prior. The denominator did most of that work: net income fell 32% YoY while compensation barely moved. In absolute terms, the Chairman and CEO each take home roughly NT$3.5–5.4M consolidated; independent directors clear NT$280K each. By global small-cap standards this is modest; by the standards of a NT$7.4B-cap Taiwan company that just printed 30% revenue growth in 9M 2025, the dollars are very small.
The structure is what matters more than the absolute number. Three quarters of CEO Chen's pay is variable (bonus + employee profit-share), and the Articles cap the director-fee pool at 5% of pre-tax profit and the employee bonus pool at 5–15% — both hard ceilings, both formula-driven. There are no stock-option grants, no SBC, no performance-share units. Long-term incentives, where they exist at all, take the form of share-trust pension top-ups. Pay is small and rules-bound — but the lack of equity grants means the only way for Hsu and Chen to get paid in stock is to buy it or keep it through their family holdco. Which they do.
Are They Aligned?
This is the load-bearing section, and the answer is yes, but more by ownership than by incentive design.
Ownership and control. The founder bloc — Hsu personal + spouse, Chen personal + spouse, plus the Hongyi vehicle they jointly control — adds up to roughly 13% of shares outstanding, worth about NT$960M at the current NT$7.4B market cap. That is not a dominant stake; the single largest holder is actually an outside individual (Niu Ji-Tsang and his Chuntang Investment vehicle) at 12.1%, and Sinbon Electronics — a listed competitor connector firm — holds 8.35% with a board seat. The control structure is therefore a founder-led but not founder-dominated small-cap, with a meaningful outside individual blockholder and a strategic-industrial co-shareholder watching from inside the room.
Insider buying / selling. Filings covering FY2023 plus the first four months of FY2024 show net positive insider activity. Hongyi Precision released pledges on 240,000 shares (a clear positive signal) and there were no net director sells of consequence — Deputy GM Lai's 41,000-share sale in 2023 was offset by 35,545 shares received in 2024 (stock dividend). One small new pledge of 40,000 shares by CTO Su Hou-An is the only negative flag, and it is immaterial at roughly NT$7M.
Pledge clean-up. Hongyi Precision — the founders' family holdco — unencumbered 240,000 of its Nextronics shares during FY2023, taking pledged-share ratio against insider holdings to essentially zero outside one immaterial CTO pledge.
Dilution. Share count grew from 33.6M (FY2023 end) to 40.4M (9M 2025) — a 20% rise, with paid-in capital moving from NT$336M to NT$404M at NT$10 par. The mechanism is stock-dividend-style issuance from retained earnings, not a cash raise: insider holdings rose proportionally on the same dates, and Taiwan small-caps typically capitalise a portion of earnings as bonus shares each year. Real per-share dilution is therefore close to zero, but reported per-share numbers should be read with that adjustment in mind.
Related-party behaviour. The one structural conflict is Hongyi Precision, the founders' family holdco that sits on the board as a corporate director and collects roughly NT$3.5–5M of director fees consolidated. This is the standard Taiwan founder-holdco arrangement and is fully disclosed; there are no related-party purchases, sales, or guarantees flagged in the proxy. The independent-director slate confirmed "no related-party share transfers" and "no related-party pledges" in their FY2023 audit-committee report. Compensation flows to founders through both the holdco and direct director seats, which is a mild governance soft spot but not an economic leakage.
Capital allocation. The company has paid a cash dividend each of the last several years (NT$2.66 for FY2022, with a similar policy through 2025) and continues to layer in stock dividends rather than buybacks. Capex has been disciplined enough to take net income up sharply through 9M 2025 (+73% YoY) on 30% revenue growth — the founders are getting paid through dividends and through the stock, not through bonuses scaling faster than profits.
Skin-in-the-Game Score (1–10)
A 7/10 reads the situation honestly. The founders own a real stake worth roughly NT$960M and their pay is small enough that it cannot substitute for stock price appreciation; the only reason it is not an 8 or 9 is that 13% is a meaningful but not dominant economic stake, and a 9.92% outside individual blockholder has slightly more economic exposure than Hsu personally.
Board Quality
Seven seats, three of them independent (43%) — at the floor of Taiwan exchange best-practice but legal. The Chairman is not also the CEO (a real plus), and the audit committee was finally constituted in June 2020, seven years after listing. Then in June 2023, the entire independent-director slate was replaced — Lai Zhi-Hsiang, Liu Fu-Long and Chang Feng-Pu rotated out; Hsueh Shou-Hung (ex-PwC CPA), Wang Yu-Ling (French-literature PhD, art-gallery GM) and Chang Pei-Chuan (lawyer, age 25–30) rotated in. This reset audit-committee tenure to zero years and substantially reduced the average industry/financial-controls expertise on the bench.
The honest read: the audit committee is formally independent. Hsueh Shou-Hung is genuinely qualified — an ex-PwC executive CPA — and his presence is the main reason this section does not grade lower. The other two IDs bring legal and arts-management backgrounds; neither will be the one pushing back on a contentious capex paper or revenue-recognition judgement. Critically, every ID is in their first three-year term, ending June 2026; the board has not yet been tested by a downturn, a contested transaction, or a dissident shareholder vote. The Sinbon-appointed director (Huang Wen-Sen) brings industry depth but represents a strategic shareholder rather than a true outside check.
Where the board could be tested. Every independent director was first seated in June 2023, all in the same election cycle. The audit committee has now had less than three full years to develop institutional memory, and the chair is a former external auditor who has not previously chaired a public-company audit committee. The first contested judgement in front of this board has not yet happened.
The Verdict
Grade: B.
The case for a higher grade. Founder-led with real but non-dominant ownership; Chairman/CEO separation; no founder-share pledges; no related-party leakage in the books; conservative cash-dividend culture; modest absolute pay; PwC-Taiwan as auditor with an unqualified opinion. The Hongyi vehicle keeps the founders aligned with public-shareholder economics rather than diverging from them, and the recent 9M 2025 print (revenue +30% YoY, NI +73% YoY) is the kind of operating leverage that vindicates a small but committed management team.
The case for a lower grade. The entire independent-director slate is new as of June 2023 and untested; the audit committee has a CPA chair but only one finance-credentialed voice on a seven-person board; ~20% share-count growth since FY2023 needs to be parsed carefully even if it is largely stock-dividend issuance; and total executive + board compensation jumped from 36% to 50% of net income the moment profits dipped, which is a structurally fragile ratio. There is also no listed-equity incentive — no options, no PSUs, no SBC — so future managers (post-Hsu, post-Chen) will be harder to align with shareholders than the founders are today.
What would upgrade this to A. A second financially-credentialed independent director (so audit and capex challenge does not rest on a single voice), and a visible succession plan beyond the joint Hsu/Chen control of Hongyi Precision.
What would downgrade this to C. Material related-party transactions appearing in the FY2024 annual report (when it is finally published), a cash capital raise that dilutes outside holders relative to the Hongyi block, or any pledged-share activity by Hsu or Chen personally as the share price rises into a control-transition window.