May 13, 2021
To further enhance the governance of Tokyo Electron (TEL) and the effectiveness of its Board of Directors, the Company discussed and evaluated the effectiveness of the Company’s Board of Directors by reviewing its activities for the period ended March 2021. A summary of the results of this evaluation is provided below.
1.Method of evaluation of effectiveness
We conducted a questionnaire survey of all Corporate Directors and Audit & Supervisory Board Members, and individual interviews with Corporate Directors and Audit & Supervisory Board Members (4members of inside and 4 members of outside) regarding the main items concerning assessment of the effectiveness of the Board of Directors, including the Nomination Committee and Compensation Committee.
We appointed a third party to provide advice on setting assessment items and to conduct, aggregate, and analyze the interviews. We then exchanged opinions on, and discussed the results of, the aggregation and the contents of the analysis with a group comprised mostly of Outside Directors and Audit & Supervisory Board Members. Furthermore, we shared and discussed these with the entire Board of Directors, and deliberated and comprehensively assessed the effectiveness of the Company's Board of Directors, including the Nomination Committee and Compensation Committee.
The main items of evaluation of effectiveness are as follows:
①Overall effectiveness of the Company’s Governance System and Board of Directors
- Role and function of the Board of Directors
- Size and composition of the Board of Directors
- Operational status of the Board of Directors
②Composition, role, and operational status of the Nomination Committee
③Composition, role, and operational status of the Compensation Committee
④Further support for Outside Directors
⑤Role of Audit & Supervisory Board Members
⑥Relationship with investors and shareholders
2.Results of analysis and evaluation of the effectiveness of the Board of Directors
Based on the results of the questionnaire, self-evaluation of the Board of Directors' effectiveness is generally high, with each person having a strong awareness of a global perspective and the Company's culture. Active discussion takes place among Corporate Directors and Audit & Supervisory Board Members, who have a variety of insights and experience. In terms of continuous improvement of corporate value, a key aim of effectiveness, many also expressed the view that each matter is reviewed and deliberated in depth, with effective plans made and conclusions drawn.
Furthermore, progress has been made in tackling and improving the following issues that were highlighted in the previous fiscal year's evaluation:
・Discussions of the medium- to long-term management strategy at off-site meetings
・With respect to risk management and risk governance, establishment of a Risk Management Committee in which heads of business divisions and group company presidents participate in detecting and continuously monitoring risk items under the leadership of risk owners in each risk area
・Nomination Committee activities including considerations for implementing a skills matrix, and reports to the Board of Directors on expanding plans for providing successor training to young employees
・Dialogs with ESG-conscious stakeholders, and decisions on issuing integrated reports in addition to sustainability reports
Meanwhile, in consideration of any further efforts to enhance the effectiveness of the Company's Board of Directors, we confirmed that there is an awareness of the importance of making continuous efforts to more thoroughly discuss the medium- to long-term management strategy and to share more information from the Nomination Committee and Compensation Committee with the Board of Directors.
Based on the above, we concluded that, while several issues were identified, in general the Board is very effectively ensuring that the key roles of the Board of Directors are being fulfilled, namely, "establishing the management strategy and vision" and "making major operational decisions based on strategic direction," as prescribed in the Company’s Corporate Governance Guidelines. Furthermore, we recognize that the Board of Directors, including the Nomination Committee and Compensation Committee, is functioning in an effective manner.
3.Future issues and policy on initiatives
In light of this evaluation of effectiveness, the Company's Board of Directors will continue in its efforts to improve the following:
・Place more focus on continuous discussion of medium- to long-term management strategies for enhancing corporate value and improving competitiveness
・Efforts to position the promotion of diversity and the development and promotion of global human resources as important corporate strategies
・Stronger collaboration with respect to the internal audit system among internal audit departments, the Board of Directors and the Audit & Supervisory Board from the perspective of group governance at a global level
・Fuller sharing of Board of Directors information with the Nomination Committee and the Compensation Committee