December 24, 2021
Version.11

Tokyo Electron Corporate Governance Guidelines
Contents
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2.
3.
4.
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6.

Section I Principles
Basic Views on Corporate GovernanceCorporate Principles
Building a Relationship of Trust with
Stakeholders for TEL’s Sustainable GrowthBusiness Policies
Medium-term Management Plan
Basic Strategy for Capital Policy

Section II Cooperation with Stakeholders
1. Appropriate Cooperation with Shareholders(1) Securing the rights of shareholders(2) Exercise of rights at general shareholder
meetings(3) Ensuring appropriate information disclosureand transparency(4) Constructive dialogue with shareholders(5) Policy on cross-shareholdings(6) View regarding anti-takeover measures(7) Capital policy that may harm shareholderinterests(8) Related party transactions
2. Appropriate Cooperation with Stakeholders
Other Than Shareholders(1) Establishment of “ Tokyo Electron Group
Code of Ethics” and actions for ensuring
compliance of it(2) Positive actions for sustainability issues(3) Ensuring diversity(4) Investments in human capital(5) Investments in intellectual property(6) Roles of corporate pension funds as asset
owner

Section III Governance Structure
1. Basic View on Governance that will Lead to
Sustainable Growth for TEL
2. Structure for Achieving Growth-Oriented
Governance Directed at Sustainable Growth
3. Board of Directors(1) Role and responsibilities of the Board of
Directors(2) View on overall balance of knowledge,
experience, and skills in the Board of
Directors, its diversity and size(3) Nominations for Corporate Director andCEO(4) Planning directed at developing a
successor to the CEO and other executive
management(5) Fair evaluationof theexecutive
management, including the CEO(6) Director and CEO compensation(7) Initiatives directed at stimulating debate in
the Board of Directors(8) Corporate Director training(9) Evaluating the effectiveness of Board of
Directors
4. Audit & Supervisory Board(1) Composition of the Audit & Supervisory
Board(2) Auditor compensation(3) Cooperation with Audit & Supervisory
Board
Membersandexecutive
management,
theInternal
Audit
Department, and the Accounting Auditors(4) Effectiveness of Audit by the Audit &Supervisory Board members
5. Internal Controls and Risk Management (Basic
Policy on Internal Controls)
6. Relationship to the Accounting Auditors(Appendix)
1.Diagram of the Corporate Governance
Framework
2. Independence Requirements for Outside
Directors and Outside Audit & Supervisory Board
Members
3. Reasons for Appointing the CEO, Individual
Corporate Directors and Audit & Supervisory
Board Members; Status of Concurrent Duties at
Other Listed Companies
4. Skill Matrix and Board Diversity

Tokyo Electron Corporate Governance Guidelines

Section I Principles
１．Basic Views on Corporate Governance(Principle 3.1.i, 3.1.ii)
In view of Tokyo Electron’s corporate philosophy that we strive to contribute to the development of a
dream-inspiring society through our leading-edge technologies and reliable service and support, Tokyo
Electron (TEL) believes improving corporate governance is important for achieving success in global
competition, realizing sustainable growth, and increasing corporate value over the mid- to long- term.
To reinforce our corporate governance, TEL will build a structure for utilizing to the maximum theworldwide resources TEL possesses, strengthen our business and technological bases, and put in placea framework that will enable us to establish earning power at a global level.
Moreover, TEL believes that continuing to be a company replete with dreams and vitality will form thefoundation that will support the motivation of our employees and the sustainable growth of TEL.
These guidelines provide a governance framework that will contribute to the achievement of thisaspiration.1
２．Corporate Principles (Principles 2.1, 3.1.i)
TEL’s corporate principles are comprised of four
elements:2the Corporate Philosophy, Management Policies,
CSR Policy and TEL Values. These elements encompass
the values TEL holds as important in our mission as acompany and specific behaviors for achieving it.

Corporate Philosophy
We strive to contribute to the development of a dream-inspiring society through our leading-edge
technologies and reliable service and support.
Management Policies
・ Profit is Essential
The TEL Group aims to contribute to the development of society and industry and to theenhancement of corporate value while continually pursuing profit.
・ Scope of Business
The TEL Group leads markets by providing high-quality products in leading-edge technology
fields with a focus on electronics.
・ Growth Philosophy
We will tirelessly take on the challenges of technological innovation to achieve continuous
growth through business expansion and market creation.
・ Quality and Service
The TEL Group strives to understand the true needs to achieve customer satisfaction andsecure customer trust while continuously improving quality and service.
・ Employees
The TEL Group’s Employees both create and fulfill company values, performing their work withcreativity, a sense of responsibility, and a commitment to teamwork.

1
2

In addition to these Guidelines, please also refer to the Integrated Report and the Sustainability Report.
For details of the four elements of the corporate principles: https://www.tel.com/about/ptc/

2

・ Organizations
The TEL Group builds optimal organizations that maximize corporate value in which all
employees can realize their full potential.
・ Safety, Health and the Environment
The TEL Group gives the highest consideration to the safety and health of every person
connected with our business activities as well as to the global environment.
・ Social Responsibility
Feeling a strong sense of corporate social responsibility, we strive to gain the esteem of society
and to be a company where employees are proud to work.
CSR Policy
The CSR operations of TEL are initiatives that realize TEL’s Corporate Philosophy. TEL pursue
sustainable operations from the viewpoints of corporate governance, legal and regulatory compliance,and business ethics while creating new value through our products and services. Based on these
efforts, we implement CSR activities to help address social issues. TEL will continue to pursue CSR
activities to build stakeholder trust, improve corporate value and, by doing so, promote the growth ofa sustainable and dream-inspiring society.
TEL Values
The TEL Values together constitute a code of conduct that encapsulates the driving force of growth andimportant values of TEL, and are practiced by Corporate Directors, Audit & Supervisory Board Members
and all employees of TEL.
Pride

We take pride in providing high-value products and services.

Challenge

We accept the challenge of going beyond what others are doing in pursuing ourgoal of becoming number one globally.

Ownership

We will keep ownership in mind as we think things through, and engage inthorough implementation in order to achieve our goals.

Teamwork

We respect each other’s individuality and we place a high priority on teamwork.

Awareness

We must have awareness and accept responsibility for our behavior as respectful
members of society.

３ ． Building a Relationship of Trust with Stakeholders for TEL’s Sustainable Growth 3(General Principle 2, Principle 3.1.i)
With the understanding that the support of our stakeholders is vital for TEL, TEL will build a relationshipof trust with our stakeholders to achieve sustainable growth and create corporate value over the mid- tolong-term based on the following views.
➢

3

Shareholders and investors
To fulfill our fiduciary responsibility to shareholders and investors, TEL will endeavor to increase
shareholder value by improving the profitability and capital efficiency.

For details on TEL’s relationship with our stakeholders: https://www.tel.com/csr/materiality/3➢Customers
Based on the customer-oriented principle, TEL will provide products and services with high added
value through our expertise in providing creative proposals that integrate innovative technologicalknow-how and diverse technologies.

➢

Employees
Employees are the foundation of corporate development. TEL aims to continue to be a company
replete with dreams and vitality, where each and every employee has creativity, a sense of
responsibility and passion, and where diverse human resources can demonstrate their abilities to thefullest.

➢Business Partners
TEL will build on our expertise in the manufacture of advanced, high-quality products underpinned bya relationship of ongoing trust with our Business Partners.

➢

Communities
TEL will endeavor to resolve social issues that surround its business operations through growth in ourbusiness, and will contribute to the development of a dream-inspiring society.

４．Business Policies(Principle 3.1.i, Supplementary Principle 5.2.1)
As a company that began as a trade company specializing in technology, TEL perceived at an earlystage changes in the business environment and quickly responded to such changes. This involved making
the transition to becoming a manufacturer with development production functions and building a global
sales and support framework. In this way, TEL has provided products and services with high added value
in world markets. Moreover, TEL has maintained growth through taking the lead in original technology
mainly in semiconductor production equipment and related domains using its original technology, where
innovations in technology will generate new value, and high added value and high earnings can be
expected.
The driving forces of our company are comprised of abundant technical know-how cultivated as a leading
company in semiconductors and FPD production equipment, the trust from customers based on our
reliable technical services, and the challenging spirit of our employees, who are capable of flexibly andrapidly adapting to changes in the environment.
With the aim of becoming a leading world corporation, TEL will continue our efforts in the future inbusiness creation where TEL will leverage our leading-edge technologies in growth areas based onelectronics technology which value creation through technical innovation can be expected.
５．Medium-term Management Plan
(Principle 3.1.i)
TEL Group is aiming for sustained growth in corporate value through a management base with globalstandard strength. TEL Group seeks to revise our financial model to achieve even greater growth and set
our sights on achieving a world-class operating margins and ROE(Return on Equity), while continuing tosustainably pursue provision of the best products and best services.
➢

VisionThe TEL Group aims to be a real global company generating high added-value and profits in thesemiconductor and flat panel display industries through innovative technologies and groundbreaking
proactive solutions that integrate diverse technologies.

➢

Financial model
While maximizing the growth potential of the TEL group, we will steadily strengthen our financial
position, and by the fiscal year ending March 31 2024, we will aim to achieve sales of 2 trillion yen or
more, operating margins of at least 30% and ROE of at least 30%.
4

In addition, the financial model developed by the TEL Group seeks not to anticipate the scope of our
future sales growth but the optimization of business management that we should seek to achieve foreach kind of sales scope anticipated. By realizing this type of financial model, the TEL Group intends
to attain a world-class operating margins and ROE.

Net Sales¥1,500B¥1,700B¥2,000B

Operating margin

26.5%

28%

> 30%

ROE

> 30%

◼ Engagement Status- Principal initiatives to achieve the financial model going forward
・ In order to create the best products, operatiing business in the fields of semiconductors and FPD
production equipment where we have strength and can leverage our accumulated technologies
and management know-hows

・ Launching into the market state-of-the-art technological products with high added-value requiredby customers in the future, and providing the best technology services

・ In order to maintain and improve our world-leading technological innovation capabilities,
continuing to make aggressive investments that take advantage of our strong financial foundation

・ Expanding earnings in aftermarket services by providing these advanced field solutions basedon the largest number of shipped equipment in the industry

・ Establishing highly efficient, high-value-added services through the use of equipment operation
data and AI

６．Basic Strategy for Capital Policy (Principle 1.3)
Based on the business policies and business plans stated above, TEL’s objective in our capital policy is
as follows.
➢

View regarding capital efficiency
While securing and generating resources necessary for growth investment, TEL will make continuous
positive efforts to provide returns to shareholders and keep appropriate balance sheet managementwith a view of medium- to long-term growth. Specifically, TEL will endeavor to improve return on equity(ROE) by further improving operating income to sales and capital efficiency and make efforts to
expand cash flow.

➢

Shareholder Return Policy
Our dividend policy is to link dividend payments to business performance on an ongoing basis and apayout ratio is around 50% based on consolidated net income attributable to owners of parent.
However, the amount of annual dividend per share shall not be less than 150 yen. TEL will review ourdividend policy if TEL does not generate net income for two consecutive fiscal years. TEL will flexibly
consider share buybacks.

5Section II Cooperation with Stakeholders
１．Appropriate Cooperation with Shareholders
TEL believes that cooperation with various stakeholders of TEL is indispensible for the sustainablegrowth of TEL. In particular, appropriate cooperation with shareholders as the providers of capital isimportant in the discipline of corporate governance. TEL will endeavor to engage in appropriate
cooperation with shareholders to ensure that their rights are effectively secured and can be exercised withease.
(1) Securing the rights of shareholders (Principle 1.1, Supplementary Principle 1.1.2, 1.1.3)
TEL will take appropriate measures to fully secure shareholders’ rights including their voting rights at
general shareholder meetings. Moreover, the board will put in place a framework for appropriately fulfilling
our corporate governance role and responsibilities. In addition, the board will make adequate considerationfor ensuring equality in regard to the rights of minority shareholders.
(2) Exercise of rights at general shareholder meetings (Principle 1.2)
TEL recognizes that general shareholder meetings are an opportunity for constructive dialogue withshareholders and, takes measures to ensure that shareholders can appropriately exercise theirshareholder rights at the general shareholder meeting.
◼ Engagement Status
Date of the・ When setting the date for holding the general shareholder meeting, TEL avoids
generalas much as possible days where the holding of a number of other generalshareholder
shareholder meetings is expected.
meeting
Date for sending
・ TEL endeavors to send out the convocation notice for general shareholder
the convocation
meetings early enough to give shareholders sufficient time to consider thenoticeagenda. Therefore, TEL forwards notices to shareholders at least three weeks
prior to the date of the general shareholder meeting.
Provision ofmaterials

・ Before sending out the convocation notice, TEL discloses details of the noticeon the website of Tokyo Stock Exchange and TEL.
・ The English translation of the convocation notice is disclosed in the samemanner at least three weeks prior to the date of the general shareholder
meeting.
・ As necessary, TEL also discloses on our website supplementary information on
proposals, etc. to enable shareholders to make appropriate decisions at thegeneral shareholder meeting.

Exercise of voting
rights・ Through the introduction of electronic voting and the use of an electronic voting
platform, TEL provides opportunities to enable all shareholders including
institutional and foreign shareholders to exercise their voting rights with ease.
When an institutional investor who holds shares in the name of a trust bank,etc. expresses an interest in advance of the general shareholder meeting in
attending the general shareholder meeting or exercising voting rights, TEL will
give consideration to the investor’s wish to the extent possible after consultingwith the trust bank, etc.

6(3) Ensuring appropriate information disclosure and transparency (Principle 3)
TEL works to contribute to the formation of fair prices for shares, etc. by disclosing corporate information
to investors in an appropriate and timely manner, and to contribute to the soundness of the financial
instruments market. With this perspective in mind, we established the “Timely Disclosure Rules,” and areworking to ascertain and manage facts and settlement information that could have a significant impact on
the investment decisions of investors, and to disclose such facts and information in a timely andappropriate manner.
In addition, we will strive to expand disclosure of non-financial information that we believe will be effective
in helping our stakeholders gain a thorough understanding of TEL.
◼ Engagement Status- The dissemination of corporate information takes place through disclosure to public institutions, thepublication of press releases and various reports, and the use of TEL website. TEL also makes efforts
to facilitate prompt, appropriate communication. For example, as contact points where two-way
exchanges of opinions are possible, TEL appoints an IR department responsible for responding toinvestors and a PR group in the General Affairs Department responsible for communicating with themedia.
(4) Constructive dialogue with shareholders (Principle 5.1)
To promote TEL’s sustainable growth and increase corporate value over the mid- to long-term, TEL will
make efforts to engage in constructive dialogue with investors including shareholders on a regular basis.
The following is our policy for establishing a framework and initiatives for promoting such dialogue.
Policy for Establishing a Framework and Initiatives
for Promoting Constructive Dialogue with Shareholders
1) Basic view (Supplementary Principle 5.1.1)
TEL will endeavor to provide opportunities for constructive dialogue with a larger number of investors
around the world, which will contribute to TEL’s sustainable growth and growth in corporate value over themid- to long-term.
Furthermore, TEL thinks it important that the Chairman of the Board, CEO and Corporate Director in chargeof finance themselves engage in direct dialogue within a reasonable and possible scope.
2) Dialogue with shareholders in general (Supplementary Principle 5.1.2(i))
The IR Department, a department under the direct control of the CEO, is responsible for dialogue withinvestors including shareholders, and the CEO is responsible for overseeing this. When there is anindividual request from an investor, the CEO or a corporate director in charge will engage in dialogue asnecessary.
3) Measures to ensure positive cooperation between internal departments to support dialogue(Supplementary Principle 5.1.2(ii))
In response to opinions and requests, etc. of shareholders, the IR Department will assume the core role inassisting the realization of constructive dialogue with shareholders through positive cooperation with
relevant departments such as the business, marketing and corporate administration divisions.
4) Measures to promote opportunities for dialogue aside from individual meetings(Supplementary Principle 5.1.2(iii))
TEL will provide opportunities for shareholders to engage in dialogue through business briefing sessions
including quarterly results briefings and teleconferences, as well as opportunities to participate in overseas
road shows, conferences sponsored by securities companies in Japan and overseas, and inspection toursof TEL’s factories. Moreover, TEL will endeavor to transmit company information through various means
including our integrated report, fact book and TEL website.

75) Measures to relay shareholder views(Supplementary Principle 5.1.2(iv))
The IR Department will regularly provide reports to the CEO, Representative Director and corporate
director in charge and engage in discussion with them regarding investors’ views and questions obtained
through individual meetings, to ensure that these resources are being utilized to increase business andcorporate value. Moreover, the CEO and others will provide reports to and engage in discussion with theboard in regard to important matters.
6) Control of insider information(Supplementary Principle 5.1.2(v))
TEL will appropriately manage important corporate information and disclose them in a fair, equitable andtimely manner. Moreover, TEL will establish internal rules to prevent insider trading and thoroughlyfamiliarize employees with these. In addition, every quarter TEL will establish the period from thebookclosing date until the announcement of financial results as a period during which officers andemployees of TEL are prohibited from buying and selling company shares.
7) Identifying shareholder ownership structure (Supplementary Principle 5.1.3)
TEL will endeavor to identify our shareholder ownership structure by periodically investigating shareholding
conditions of beneficiary shareholders and using these in constructive dialogue with investors.
8) Establishing and disclosing business strategy and business plan
(Principle 5.2)
In formulating management strategies and management plans, TEL strives to realize capital efficiency
exceeding the cost of shareholders' equity, focusing on the balance with business stability, although TEL
is aware of its cost of shareholders' equity as a comprehensive indicator reflecting fluctuations in thebusiness environment and expectations from shareholders. TEL articulates our earnings plans and basic
objectives regarding our capital policy, and along with indicating targets for profitability and capitalefficiency such as net sales, gross profit margin, operating margin, net profit, and return on equity (ROE),
will provide explanations to shareholders in a manner that is easy to understand about specific measures
it intends to take to achieve our plans and target.

(5) Policy on cross-shareholdings (Principle 1.4)
1) Policy concerning cross-shareholding of listed shares
TEL does not hold crossheld shares in principle. Only when TEL believes there to be a strong rationale
for holding such shares in our relationship with an issuer will TEL hold the shares of another company,
such as investing in business partners to maintain medium- to long-term relationships, investing inbusiness partners for stable procurement, investing in business partners to maintain technical alliance.
Regarding the shares held, the executive management should annually verifies the rationale of holding
shares of another company and provides a report to the Board of Directors from the viewpoint of theinvestment purpose at the time of stock acquisition, consistency with the latest business strategy, etc., andthe benefits and risks of holding the shares. As a result of the above verification, if it is determined that theholding is not rational, we will consider selling the shares.
2) Policy on the exercise of voting rights in relation to cross-shareholdings
When TEL exercises our voting rights for shares TEL holds, as a shareholder it carefully considers
proposal details, engages in dialogue with the issuer as necessary and makes decisions regarding
proposals from the viewpoint of increasing corporate value of TEL and the issuer over the mid- to longterm. TEL will cast an opposing vote on any proposal it believes may harm shareholder value.
(6) View regarding anti-takeover measures (Principle 1.5)
TEL will not introduced any so-called anti-takeover measures. We believe that improving corporate value
is the ultimate anti-takeover measure. TEL will address any acquisition proposals made after firstcomprehensively assessing the short-, medium-, and long-term impact on corporate value and shareholder
value.
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(7) Capital policy that may harm shareholder interests (Principle 1.6)
With respect to capital policy that results in the change of control or in significant dilution, TEL
conscientiously examines the necessity and rationale of such measures to ensure they do not unduly harmshareholders’ interests. Moreover, TEL provides adequate explanation to shareholders and follows
appropriate procedures.
(8) Related party transactions (Principle 1.7)
TEL requires Corporate Directors or Audit & Supervisory Board Members to obtain the approval of theBoard of Directors when engaging in transactions with TEL or transactions that are in conflict with theinterests of TEL and the Corporate Directors or Audit & Supervisory Board Members. This includes
engagement in competing business with TEL. Moreover, after such transactions take place, a report must
be presented to the board regarding material matters concerning such transactions.
◼ Engagement Status- TEL undertakes regular annual investigations whether or not there are transaction between TEL anda Corporate Director, an Audit & Supervisory Board Member, or a relative thereof.
- With respect to transactions between TEL and major shareholders, there are currently noshareholders that equate to major shareholders (defined as shareholders with at least 10% of voting
rights) in TEL. If major shareholders emerge, TEL will take procedures to ensure appropriateness oftransactions according to the previously stated policies.
２．Appropriate Cooperation with Stakeholders Other Than Shareholders
Appropriate cooperation with stakeholders other than shareholders is also essential for the sustainablegrowth of TEL. TEL believes that respecting the rights and position of stakeholders and fostering a climatethat conforms with corporate ethics will promote the development of society and the economy as a whole
and, in turn, will establish the foundation for the further growth of our company’s business.
(1) Establishment of “Tokyo Electron Group Code of Ethics” and actions for ensuring complianceof it (Principle 2.2, Supplementary Principle 2.2.1)
TEL maintains corporate ethics and compliance with laws and regulations by TEL Group as a whole ata high standard. Giving primary importance to acting in compliance with laws and international rules, TEL
has established “Tokyo Electron Group Code of Ethics”4 and makes efforts to ensure all employees arefamiliar with this.
Moreover, TEL appoints a Chief Business Ethics Director from among Corporate Directors who is
responsible for ethics and has established an ethics committee as a steering organization for promoting
corporate ethics throughout TEL.
Furthermore, TEL has established a set of TEL Values (see Section I No. 2) which summarizes intrinsic
values that act as a driving force in TEL’s growth and which serves as a code of conduct that all Corporate
Directors, Audit & Supervisory Board Members, and employees must practice.
(2) Positive actions for sustainability issues(Principle 2.3, Supplementary Principle 2.3.1, 3.1.3, 4.2.2)
In order to realize sustainable growth and medium- to long-term improvements in corporate value, we
believe it will be necessary to use our entire supply chain to actively and dynamically address social
problems pertaining to sustainability, starting with the environment and human rights. We will contribute to
the realization of common values by harmonizing the social themes of digital capabilities and green
business, by taking full advantage of our expertise as a semiconductor and FPD production equipment
manufacturer, built up through our experience as a leading company in the industry, and utilizing ourvarious management resources, including our employees, who are the source of our value creation.

4

For details on “Tokyo Electron Group Code of Ethics”:

https://www.tel.com/about/compliance/9Based on this way of thinking, we will identify vital material issues we should prioritize in order to improve
our medium- to long-term corporate value, by organizing social and business environments, consideringrisks and opportunities, and engaging in proactive discussions with our stakeholders.
TEL intends to contribute to the resolution of industrial and social issues and the achievement of
Sustainable Development Goals (SDGs) adopted by the United Nations, and to the creation of asustainable society.
◼ Engagement Status- Material issues are determined at the Sustainability Meeting attended by the Chairman of the Board,
the CEO/President and Representative Director, as well as the directors involved in sustainability.
We take into consideration the focal themes of each material matter, set fiscal year goals and mediumterm goals, and endeavor to accomplish said goals through business activities.5-

In order to realize a sustainable supply chain, TEL began E-COMPASS (Environmental Co-Creationby Material, Process and Subcomponent Solutions), a new environmentally focused initiative. As aleading company in the industry, we will devote the entire supply chain toward reducing environmental
impact caused by products during their operation and work to enhance the competitiveness and added
value of products.

(3) Ensuring diversity (Principle 2.4, Supplementary Principle 2.4.1)
At TEL, diversity and inclusiveness are pillars of management that help realize continuous innovationand increase corporate value, and our management is strongly committed to, and actively engaged in,pursuing diversity around the themes of nationality, gender, and generation.
◼ Engagement Status
With respect to the diversification of the Board of Directors, as of December 2021, of the 12 directors
on the Board, 1 is a foreign national and 2 are women. Furthermore, as a global company, TEL
promotes the right person in the right place across countries, such as appointing local personnel tothe position of president at its overseas group companies in the United States, Europe, Asia, and5

For details on initiatives related to our material issues: https://www.tel.com/csr/materiality/

10

-

-

other areas, and having overseas personnel take on the position of the headquarters. Simultaneously,
we hold the Corporate Senior Staff (CSS) meeting on a quarterly basis, comprised of executive officers
and the management members of overseas group companies, among other members, and work toadvance the deployment of our management strategy at a global level with a sense of urgency.
In order to advance diversity and inclusiveness, we consider the characteristics of each region,
establish target values and action plans for each region, and engage in a variety of initiatives.
・ We develop a talent pipeline (plan for developing human resources) for succession planningthat takes diversity into account, and are engaged in efforts to increase the ratio of women in
management positions
・ Given that the majority of TEL's employees are engineers, we utilize recruiters and invest
heavily in branding in order to hire women at a level at least equivalent to the general ratio of
women in each region (for engineers, the ratio of women with majors in science andengineering)・ By utilizing technology and employing common personnel systems around the world, wedevelop mechanisms that allow overseas entities to fulfill headquarters roles and functions,even from outside Japan・ We hold events such as talks on diversity and inclusiveness by internal and external experts
and leaders, create networking opportunities for employees with similar characteristics andexperiences, and implement career roundtable discussions for people who are about to take,or have just returned from, maternity or childcare leave
In Japan, given the large number of opportunities we have to improve diversity, starting with gender,when compared with other countries, in 2021 we set a goal to achieve a female manager ratio (2.2%
as of March 31, 2021) of 5.0% by 2026, and are working to achieve this ratio.

(4) Investments in human capital(Supplemental Principles 3.1.3, 4.2.2)
Based on the thinking that “corporate growth is about people, and employees are a foundation for
creating value”, TEL's management deliberates on the investments in human capital that should be madeto powerfully advance management strategies for the company, and strategically implement theseinvestments.
◼ Engagement Status
Global personnel management
TEL has deployed business to 76 bases of operation in 18 countries, and we believe that it isimportant for personnel with diverse personalities, skills, experiences, and strengths to share a global
sense of values as “One TEL,” and strive as one to create value. In 2017 we introduced a globally
uniform job-based human resource system (GTC: Global TEL Career-Paths) and personnel
management system, and focused on developing a common platform for personnel activities, anddeveloping and enhancing the careers of our personnel around the globe. This has allowed us toarrange flexible and optimal resource distribution based on changes in business environments.
Practicing our Corporate Philosophy and code of conduct (TEL Values) etc.
The basis of our global personnel management are our corporate principles and sense of value,
which we have treasured since our founding. Management, including the CEO, took the initiative tocreate opportunities for direct dialogue with employees, through the use of venues like employee
meetings, in order to communicate the ideal TEL state to employees. TEL management also
implements programs to share and practice our Corporate Philosophy and the TEL Values throughour level-based training, which is also provided when an employee is hired.
- Motivated management
TEL supports every one of our employees so that they may exercise their capabilities to the fullest,
and regularly challenge themselves to achieve ambitious goals. Such initiative help realize continuous
improvements in employee engagement scores, work to enhance product competitiveness andcustomer support capabilities, and improve productivity.
Based on our globally uniform human resources platform, positions and career opportunities at TEL
are made public to all employees, thereby making it possible for employees to autonomously form
their careers and visualize their career paths. With respect to career formation, we actively invest in
11capability development through TEL UNIVERSITY (an internal shared training platform that allows
employees to personally form their careers and support employee self-realization). In addition, TEL
provides employee treatment that is fair and competitive at a global level, depending on the company’s
performance and the degree of employee’s individual responsibilities and contributions, and works tosecure and retain superior human resources.
(5) Investments in intellectual property (Supplemental Principles 3.1.3, 4.2.2)
TEL’s basic policy pertaining to intellectual property is to acquire intellectual property, and have it
contributed to the enhancement of TEL corporate profit by using it to support business activities. In order
to continue growing in the semiconductor industry, which continues to experience its own unique evolution,
TEL expands research and development on a global scale, including collaborations between industry andacademia. In addition to assignments at headquarters, TEL assigns personnel responsible for intellectual
property at R&D and production bases located in various areas throughout the world, considers projects
from various angles, such as R&D and marketing perspectives, develops intellectual property portfoliosthat match technological and property strategies, and works to increase TEL's competitive capabilities.
◼ Engagement Status- We previously announced R&D investments of approximately 400 billion yen over a three-year period
starting from FY2020, and we are proceeding with these investments in accordance with these plans.
Going forward, we will engage in proactive growth investments on top of a strong financial foundation
based on profit.
- In addition to collaboration with world-wide R&D bases (6 bases of operation) centered around
domestic R&D bases (6 bases of operation), by utilizing alliances with external consortia, research
institutions, and academia, we are working to enhance TEL research and development capabilities
and continue R&D that contributes to the creation of value for our customers.
- As engineers are the crux of our development strategies, we provide continuous training to enhancetheir awareness of intellectual property, and a cumulative total of around 4,370 of our engineers (asof March 31, 2021) have become inventors. Furthermore, as engineers frequently handle highly
confidential information, such as the technical information of customers and business partners, we
also focus on providing them with training pertaining to confidential information management.
- TEL owns 18,692 patents (as of March 31, 2021), and maintains superiority in the field of intellectual
property at a global level.
（6）Roles of corporate pension funds as asset owner (Principle 2.6)
The Tokyo Electron Pension Fund defines its basic policy as preserving the beneficiary interests of its
participants, recipients, and others. It also stipulates the roles and responsibilities of related parties who
implement the policy, as well as management policies.
◼ Engagement Status
The Asset Management Committee, which is responsible for managing the pension fund, is composedof persons with expertise from the personnel, accounting, and finance departments. It also receives
assessments and advice concerning asset allocation and selection of investment management
institutions from external experts.
The Asset Management Committee receives reports from investment management institutions
concerning the performance of the pension fund, the results of the exercise of voting rights andstewardship activities and monitors the activities against the investment management institutions.

12Section III Governance Structure
1. Basic View on Governance that will Lead to Sustainable Growth for TEL
TEL upholds the vision of being a real global company that generates high added value and profits inthe semiconductor and flat panel display industries through innovative technologies and groundbreaking
proactive solutions that integrate diverse technologies. In an environment where over 80% of our sales
come from overseas sales, TEL regards building governance structure as essential in order to become areal global company that achieves success in global competition achieves sustainable growth.
To that end, TEL has built a framework to maximize use of worldwide resources, and has incorporated
a wide range of opinions to strengthen our management platform and technology base, establishing agovernance structure capable of ensuring that TEL attains global-level earnings power.

2. Structure for Achieving Growth-Oriented Governance Directed at Sustainable Growth(Principle 4.2, 4.10)
TEL uses the Audit & Supervisory Board System, which consists of a Board of Directors and an Audit &Supervisory Board. Effective governance is achieved based on the supervision of management by the
Audit & Supervisory Board.
Furthermore, in addition to the Board of Directors, whose role is to make major operational decisions,play a supervisory role in the executive management’s execution and support appropriate risk-taking by
them, TEL has also established systems that will facilitate growth-oriented governance directed atsustainable growth for TEL, including the following:
The Nomination Committee and Compensation Committee, to ensure fair, effective, and transparent
management

The Corporate Senior Staff (CSS), to advance company strategy

The Business Execution Meeting, to play a role in deliberations of the executive management◼ Engagement Status- A Board of Directors
The Board of Directors, which supports appropriate risk-taking by executive management, is awarethat its main responsibility is to provide a strategic direction for the TEL Group, and thus conducts
constructive deliberations regarding management strategies and management plans, and functions
as a venue for supervising the progress of TEL's Medium-term Management Plan, and other similar
matters. Furthermore, regarding decision-making authority delegated to the executive managementby the Board of Directors, reports and explanations on the status of the Business Execution Meeting's
deliberations must be presented to the Board of Directors in order to oversee that the decision-makingof executive management is functioning appropriately (see 3. Board of Directors, below, for further
details). Note that, in FY2021, the Board of Directors meeting held 12 times.
-

The Nomination Committee and Compensation Committee
The Board of Directors has both a Nomination Committee and a Compensation Committee: bothcommittees engage in proactive deliberations with appropriate guidance and involvement on the partof Independent Outside Directors regarding the nomination of candidates for CEO and directors, aswell as the compensation system for officers, respectively.
The existence of these two committees ensures fairness of corporate management and facilitates
the sound Growth-Oriented governance of TEL.

13

Nomination Committee
Purpose: To ensure a fair and effective Board of Directors composition through the nomination ofcandidates for CEO and Corporate Director.
Role:
To nominate candidates for the Board of Directors to be elected by the General
Shareholder Meeting and candidates for CEO to be elected by the Board of Directors
and propose these to the Board of Directors.

Composition: A total of 4 directors: 3 Internal Directors, and 1 Independent Outside Director(FY2022)Frequency of Meetings: 10 times (FY2021)
Compensation Committee
Purpose: To ensure transparency, and fairness in management and adequacy of compensation
through the compensation system.
Role:
To propose the policy and the system for compensation received by Corporate Directors
and executive officers of the TEL Group, as well as individual compensation amounts for
the Representative Directors.

Composition: A total of 4 directors: 2 Internal Directors, and 2 Independent Outside Directors(FY2022)Frequency of Meetings: 7 times (FY2021)-

Business Execution Meeting
TEL has established the Business Execution Meeting to play a role in deliberations regarding
executive management.
Purpose: Regarding matters for referral to the Board of Directors, the Business Execution Meeting
aims that the executive management fully considers in the meeting in order to clarify
points that must be discussed by the Board of Directors, and also ensures rationality inthe decision-making process for decisions made by executive management.
Structure: The meeting consists of Executive Directors and Audit & Supervisory Board Members(Observers), with executive officers attending as necessary.

-

CSS (Corporate Senior Staff)
TEL has established the Corporate Senior Staff (CSS) as one effective mechanism for utilizing
TEL's worldwide resources to the fullest extent, and to realize aggressive governance.
Purpose: In order to advance the corporate strategy effectively and powerfully, CSS aims not
only to foster common understanding of the management strategy throughout TELgroup through CSS members, but also to manage the progress on strategy execution
and review additional measures from a global, cross-organizational perspective anda mid- to long-term management perspective, without being encumbered by shortterm perspectives focused primarily on the division where each member is in charge.
Composition: executive officers and members of management from overseas group companies,
etc.

-

Liability-limiting contracts, Directors & Officers Liability Insurance contract
The Company has concluded liability-limiting contracts specified by Article 423, Paragraph 1 of theCompanies Act of Japan with Outside Directors and Audit & Supervisory Board Members. The liability
limitation under these contracts is the minimum liability amount specified in Article 425, Paragraph 1of the Companies Act of Japan, provided that the Directors perform their duties in good faith withoutgross negligence.
14

Furthermore, the Company has concluded a Directors and Officers Liability Insurance contract as
stipulated in Article 430-3, Paragraph 1 of the Companies Act of Japan with an insurance company.
The insurance contract covers damages, such as compensation for damages, settlements, andlitigation expenses, arising from acts and nonperformance of acts committed in relation to the
execution of duties by the insured.
3. Board of Directors(1) Role and responsibilities of the Board of Directors (Principle 4.1)
The Board of Directors works to achieve sustainable growth and increase corporate value over the
medium- to long-term based on its fiduciary responsibility to shareholders. The roles and responsibilitiesof the Board of Directors are as follows:① Establishing management strategy and vision
The Board of Directors establishes the vision and strategy TEL should target in order to be
successful in global competition by setting forth the Corporate Philosophy, Management Policies andother Corporate Principles; presenting the long-term strategic vision; and determining the Mediumterm Management Plan and capital policy.
② Making major operational decisions based on strategic direction(Supplementary Principle 4.1.1)
Proactive risk-taking and a risk management structure to support it are essential for being
successful in global competition and achieving sustainable growth. The Board of Directors
incorporates a wide range of opinions that stem from the extensive knowledge and experience ofIndependent Outside Directors and Audit & Supervisory Board Members in addition to Executive
Directors who are well-versed in the business, making major operational decisions that are ofparticular importance to the business. Major operational decisions of particular importance refers tomatters that have a major impact on such as TEL Group performance and financial status and midto long-term growth and corporate value, including approval of the Medium-term Management Plan,
policies on shareholder return, corporate reorganization and Marger & Acquisition, and similar matters.
Furthermore, reports and explanations on the status of the Business Execution Meeting's
deliberations must be presented to the Board of Directors in order to supervise that the decisionmaking of the executive management is functioning appropriately.
The strategy determined by the Board of Directors and the Business Execution Meeting is
implemented expeditiously by the executive officers responsible for each division.
③ Engaging in constructive, open-minded debate
The Board of Directors seeks the active participation of those present in discussions in order toobtain a wide-range of opinions, and supervises management and operational execution based on
active debate.
The Board of Directors respects opinions even when they are minority or opposing viewpoints,
including opinions voiced by Outside Directors; revises the conditions for implementation or thecontent of proposals as necessary; and engages in extensive debate with the goal of reachingdecisions based on consensus. However, emphasis is placed on making necessary decisions quickly
to avoid missing opportunities.
◼ Engagement Status
The criteria for determining the importance of matters for referral to the Board of Directors arecontinually revised in light of the environment surrounding TEL, and in light of the provisions of theCompanies Act. In order to allow the Board of Directors more time for deliberation of major operational
decisions, the Board of Directors rules were partially amended with heightened referral criteria in May
and October 2020.
In the TEL Board of Directors meetings, proactive, frank opinions are always presented aggressively,
not only by internal Corporate Directors, but also by Independent Outside Directors and Audit &Supervisory Board Members, thereby enabling active debates.
15

(2) View on overall balance of knowledge, experience, and skills in the Board of Directors, its
diversity and size (Supplementary Principle 4.11.1)① Policy on election of Executive Directors (Principle 3.1.iv, 3.1.ⅴ)
Executive Directors of TEL are required to have superior executional abilities underpinned byexperience, insight, and a track record in management, high sensitivity to all possible risks, being able
to properly analyze and judge matters, and frankly state the opinion that they believe to be correct
during debates.
Moreover, in electing Executive Directors, consideration is given to achieving a balance ofCorporate Directors who are well-versed in each division of TEL, including
・ Sales and Service
・ Manufacturing
・ R&D
・ Corporate Administrationand other divisions, to the extent possible in order to ensure constructive debate in Board of Directors
meetings born out of a broad range of backgrounds and knowledge.
◼ Engagement Status
The current Executive Directors have been elected in a manner that has achieved the balance
described above.
The role of Executive Directors does not end with referring and explaining proposals as therepresentative of each division. They also contribute to active debate, proper decision-making, andsupervision of execution through objective, constructive opinions coming from different perspectivesof each Executive Director.
② Policy on election of Independent Outside Directors and Independent Outside Audit &Supervisory Board Members (Principle 3.1. iv, 3.1.v, 4.7, 4.8, 4.9)
Stating their unreserved opinions from an independent perspective, Independent Outside Directors andIndependent Outside Audit & Supervisory Board Members guide Board of Directors debates in the proper
direction for success in global competition that does not follow the same line of discussion proposed byinternal Corporate Directors.
From the aforementioned
perspectives, Independent Outside Directors and Independent Outside Audit & Supervisory Board
Members shall have:・ Knowledge of global business・ Broad insight into related industries
・ An extensive network of personal contacts
・ Social perspectives
・ Objectivity from capital market and other perspectives
・ Knowledge of finance and accounting
・ Broad legal knowledge
Each Independent Outside director and Outside Audit & Supervisory Board Member shall have a properbalance of the above traits, and others.
Furthermore, TEL also ensures the independence of Independent Outside Directors and Independent
Outside Audit & Supervisory Board Members through separately specified Independence Requirements
for Outside Directors and Outside Audit & Supervisory Board Members6, in addition to the requirements
under the Companies Act.
TEL will also take a positive stance on considering people equipped with the knowledge and character
that TEL thinks will contribute to sustainable growth for TEL in the future as Independent Directors, etc.

6

For details of Independence Requirements, please refer to Appendix 2 “Independence Requirements
for Outside Directors and Outside Audit & Supervisory Board Members”.
16◼ Engagement Status
Currently, 7 of the 17 participants in the Board of Directors meetings, including the Audit & Supervisory
Board Members, are outside members, consisting of 4 Independent Outside Directors and 3
Independent Outside Audit & Supervisory Board Members. TEL believes that the current Board of
Directors meetings achieve an appropriate sense of productive tension and constructive debate thatare essential for business execution decisions and supervision due to the combined the perspectiveof Executive Directors familiar with the business, and the perspective of non-executive directors
including outside members.
③ Size and diversity of the Board of Directors
TEL considers it essential to maintain a Board of Directors with the appropriate size to ensure highquality, active debate, and in addition, to have a good balance of knowledge, experience and skills as wellas the diversity (including gender and international aspects) expected of both Executive Directors andIndependent Outside Directors. The number of Corporate Directors shall therefore be the appropriate
number for the operating environment at the time, considering a good balance in terms of knowledge,
experience, and skills. The number of Corporate Directors shall therefore be the appropriate number forthe environment at the time, considering the balance of knowledge, experience, and skills, up to the 18
Directors set forth in the Articles of Incorporation, in light of such factors.
Regarding candidates for the Board of Directors and Audit & Supervisory Board Members, TEL will makeefforts going forward to appoint a variety of personnel, including gender and international aspects, whohave the combination of knowledge, experience and skills expected of them.
◼ Engagement Status
The current Board of Directors consists of 12 Corporate Directors, including 2 women Corporate
Directors and one Corporate Director of foreign nationality, and TEL believes this to be the appropriate
size for achieving a well-balanced composition of directors at the present time.
We have disclosed a skill matrix that lists the skills of each Corporate Director and Audit andSupervisory Board Member.7(3) Nominations for Corporate Director and CEO(Principle 3.1.iv, Supplementary Principle 4.3.2, 4.3.3)
TEL has established a Nomination Committee to ensure fairness and efficiency in management. The
Nomination Committee Rules stipulate that the CEO is not a member of the Nomination Committee. The
authority to propose election or dismissal of the CEO and Corporate Directors is entrusted to Nomination
Committee members.
Furthermore, the Nomination Committee has formulated the Nomination Committee Activity Guidelines
to enable it to conduct activities every year based on the same standards. These guidelines define therequired qualities and eligibility of the CEO and Corporate Directors, and the trigger for investigations for
dismissing of the CEO, and efforts are made to ensure the objectivity, timeliness, and transparency of theprocedures for appointment and dismissal.
For Corporate Directors, the eligibility and qualities that are considered to be required are:・Judgement and qualities that contribute to an increase in corporate value in the short-, mediumto long-term
・Skills, character, dignity, and insight appropriate for management
・Fairness, popularity, personality
・Ethical views appropriate to a global company
・Sensitivity and ability to understand risk
For the CEO, in addition to the required qualities and eligibility of Corporate Directors listed above,
TEL considers the following to be requirements: the capability to be the driving force of the Group as awhole, strong leadership with the ability to execute, and a high level of management ability.
7

For individual skills of Corporate Directors and Audit & Supervisory Board Members, please refer toAppendix 4 “Skill Matrix and Board Diversity”.
17Regarding dismissal of a CEO, in situtaions such as when doubts arise concerning these qualities
and eligibility based on the Nomination Committee Activity Guidelines, the Nomination Committee willconduct a review.
① Role of the Nomination Committee
1) The Nomination Committee nominates candidates for Corporate Director to be elected by thegeneral shareholder meeting and proposes these to the Board of Directors.
2) The Nomination Committee nominates Representative Director candidates for the Chief
Executive Officer (CEO) to be elected by the Board of Directors, and proposes these to theBoard of Directors.
3) The Nomination Committee refers to TEL's Independence Requirements when making
proposals from among the Corporate Directors and candidates for Corporate Director to theBoard of Directors; note that these requirements were established based on the requirements
for Independent Directors set forth by the Tokyo Stock Exchange.

② Ensuring the independence of the Nomination Committee (Supplementary Principle 4.10.1)
The Nomination Committee shall consist of three or more members including Outside Directors
or Outside Audit & Supervisory Board Members. In order to ensure the independence of thosemembers, CEO may not be elected to the Nomination Committee. Moreover, the Nomination
Committee recommends Nomination Committee members for the next period and the Board of
Directors elects the members based on those recommendations. This method achieves a high degreeof independence and fairness in the election of candidates and ensures the authority of the CEO does
not extend to the management of the Nomination Committee.
The term of Nomination Committee members shall be one year. Re-election in principle up to four
years is permitted.
◼ Engagement Status- Procedure for proposing nominated candidates
・Proposal of candidates for CEO and candidates for internal Corporate Director
When proposing candidates from inside TEL, the Nomination Committee will independently selectmultiple candidates for nomination from a pool of suitable candidates, and will screen them throughinterviews with the candidates and relevant people inside and outside of TEL, and other means. The
Nomination Committee will then propose candidates who possess the above-listed eligibility andrequired qualities for a CEO and Corporate Directors to the Board of Directors as candidates for
CEO or Corporate Director for the next period, after having exchanged opinions with Outside
Directors in advance and having engaged in other careful consideration.
・Proposal of candidates for Outside Director
When proposing candidates from outside of TEL, the Nomination Committee will consider people
from the pool of candidates who are appropriate because they have the knowledge and backgroundto contribute to the Board of Directors, and other points stated in the proposal of candidates who
possess the required eligibility and qualities for internal Corporate Director noted above. They willpropose candidates for Outside Director to the Board of Directors after also taking the opinions of
the currently appointed Outside Directors into consideration.
The respective personal networks of members of the Board of Directors, including Outside
directors and Outside Audit & Supervisory Board Members will be used in electing candidates, notthe personal networks of the Nomination Committee members alone.
・Proposal of candidates for Audit & Supervisory Board Member
Nominees for Audit & Supervisory Board Member are not subject to nomination by the Nomination
Committee. When electing candidates for Audit & Supervisory Board Member, the Audit &Supervisory Board will consider candidates recommended by the Audit & Supervisory Board andfrom executive management and consider those persons deemed appropriate because they havethe knowledge and background to contribute to TEL. Finally, after consented by the Audit &Supervisory Board, candidates for Audit & Supervisory Board Member are proposed to the Board of
Directors.
18

(4) Planning directed at developing a successor to the CEO and other executive management(Supplementary Principle 4.1.3)
TEL has formed a pool of candidates for the next generation of management personnel in accordancewith the TEL Succession Plan and is working on the development of successor candidates under thesupervision of the CEO, and in accordance with the Group's management mission. The Nomination
Committee analyzes and scrutinizes the abilities and readiness of successor candidates, and the Board of
Directors holds discussions based on reports from the Nomination Committee, and appropriately
supervises the progress of the successor candidate training plan. Note that policy dictates that while theCEO is involved in promoting the development of management levels eligible to become successor
candidates, the CEO is not involved in nominating specific candidates from the pool of successor
candidates.
◼ Engagement Status
The CEO and Representative Directors continually evaluate the skill, character, dignity, and insight ofsuccessor candidates from multiple perspectives in the course of performing day-to-day duties, andcontinually support education of the candidates through assignments, training, and other opportunities.
They will use the Corporate Senior Staff (CSS), internal seminars for select leaders, and otherresources as a pool of promising human resources.
The abilities and readiness of the successor candidates are confirmed at the Top Management Review
Meeting8 at which missions that lead to the accumulation of knowledge and experience including
important challenges related to Group management are assigned, and then their performance ischecked.
(5) Fair evaluation of the executive management, including the CEO(Supplementary Principle 4.3.1)
TEL takes the following steps to ensure fair and highly transparent evaluation of the executive
management, including the CEO.
① Evaluation of the CEO・The formula for calculating the performance-linked compensation of the CEO is determined by the
Board of Directors, based on the proposal of the Compensation Committee. It is decided fairly andin a highly transparent manner.
・In nominating candidates for CEO, the Nomination Committee will evaluate the appropriateness ofthe candidate based on past performance, including an evaluation of performance on assigned
duties, and considering his or her personality, including the character and dignity, as a manager.
They then determine whether or not he or she is capable of shouldering those responsibilities.
The Nomination Committee has formulated the Nomination Committee Activity Guidelines thatsummarize CEO requirements up until appointment, such as eligibility and required qualities, aswell as the trigger for investigation for dismissal, and these guidelines have been reported andshared with the Board of Directors. In the above manner, efforts have been made to increase theobjectivity and transparency of the CEO selection and dismissal process.
② Evaluation of the Executive Directors
・Executive Directors bear the responsibility of achieving performance goals for the division where
they are in charge based on the budget and Medium-term Management Plan. The degree to whichthat is achieved is an important factor in personnel evaluations for performance-linkedcom pensation.
・Executive Directors' annual performance-linked compensation is ultimately determined by the CEO
based on an evaluation of each director's duties and performance, the bonus amount being within
the scope decided at the general shareholder meeting based on a decision by the Board of Directors.
8

The Top Management Review Meeting: The meeting is attended by Representative Directors,
members of the Nomination Committee, the executive officer in charge of human resources, andothers, who are responsible for formulating training plans and selecting candidates for successors.
19

The Compensation Committee also verifies the appropriateness of the evaluation and decision of
the bonus amount for each director, with reference to advice from external experts.
(6) Director and CEO compensation (Principle 3.1.iii, Supplementary Principle 4.2.1, 4.10.1)① Policy on compensation
The TEL Group emphasizes following points with regard to policies on compensation for Corporate
Directors and Audit & Supervisory Board Members:
1. Levels and plans for compensation to secure highly competent management personnel with global
competitiveness2. High linkage with business performance in the short term and medium-and-long term increase of
corporate value aimed at sustainable growth
3. Securement of transparency and fairness in the decision process of compensation andappropriateness of compensation② Composition of compensation
Compensation for inside Directors consists of fixed basic compensation, annual performance-linked
compensation, and medium-term performance-linked compensation as the table below.
Outside Directors have a role of giving advice to the management from the perspective forincreasing corporate value over the medium- to long-term, in addition to the management
supervision.The Company has introduced non-performance-linked stock-based compensation as asystem that is more consistent with their expected role, and the compensation for Outside Directors
consists of fixed basic compensation and non-performance-linked compensation (stock-based
compensation).
Compensation for Audit & Supervisory Board Members consists solely of fixed basic compensation,in consideration of their role being primarily audit and supervision of management. Payment of
retirement allowances, which constituted a significant portion of fixed compensation to Corporate
Directors, was abolished in and after ended March 2006.

Fixed basic
compensation
Corporate
Directors(excluding
outsideDirectors)
OutsideDirectors

Annual performance-linked
compensation
Stock
Cash
compensationbonuses
based
stock option

Medium-term
performance-linked
compensation
Performance
share(Stock-based
compensation)

Non-performancelinked
compensation
Restricted
stock units(stock-based
compensation)

〇

〇

〇

〇

―

〇

―

―

―

〇

③ Policy and decision method according to types of compensation
1. Fixed basic compensation
Fixed basic compensation for Corporate Directors is determined within the limit of total fixed basic
compensation, which has been resolved at the Annual General Meeting of Shareholders. The amount ofcompensation for Representative Directors is discussed and decided by the Board of Directors based on
the proposals by the Compensation Committee, while the amount of compensation of Corporate Directors
excluding Representative Directors is finalized by CEO based on the resolution of the Board of Directors.
The amount of compensation for Directors are determined with reference to the compensation standardsof industry peers in Japan and overseas provided by the external research organizations, along with advice
from external experts, and for Executive Directors, commensurate with the scale of job responsibilities
based on the job grade framework. Furthermore, the Compensation Committee also verifies its
appropriateness with reference to the advice from the external experts.
20

2. Annual performance-linked compensation<< Policies on composition and payment ratios on fixed basic compensation >>Among Directors, only inside Directors are eligible for annual performance-linked compensation,and its
amount is linked to the business performance in the relevant fiscal year. In principle, annual performancelinked compensation consists of cash bonuses and stock compensation-based stock options; thecomposition is roughly 1:1. Stock compensation-based stock options are subject to a three-year exercise
restriction period from the date of allotment of rights, designed to motivate recipients to share a shareholder
perspective, while contributing to increasing corporate value over the medium- to long-term.
Annual performance-linked compensation is a profit-sharing type compensation paid
commensurate with business performance for each fiscal year, therefore no policy is in place for the payout
proportion of fixed basic compensation.
<<Calculation indicators and reason for choosing the indicators>>
As an incentive for Corporate Directors including Representative Directors toward corporate businessperformance, actual net income attributable to owners of parent is selected as the basis of calculation
indicators, among profit indicators. In addition, actual consolidated ROE performance achieved during afiscal year, which is an indicator to represent capital efficiency, is incorporated in the formula.
<< Calculation method and decision method >>・Representative Directors
In calculating annual performance-linked compensation for Representative Directors, we have set a
formula that uses net income attributable to owners of parent and a consolidated ROE as performanceindicators. Based on that calculation, the Compensation Committee deliberates on a proposal that reflects
the performance evaluation (targets based on short-term and medium-term management strategies) ofeach Representative Director, with reference to the advice from the external experts, and proposes to theBoard of Directors. The Board of Directors determines the final amount of compensation based on the
proposals.
Setting the mission(evaluation items)
Set the mission after
deliberations by theCompensation Committee aswell as deliberations by themembers of the Board of
Directors excluding theRepresentative Directors

Performance evaluation
After deliberations by theCompensation
Committee,evaluated by themembers of the Board of
Directors excluding theRepresentative Directors

Determination of the amount ofcompensation
Determined by resolution of theBoard of Directors upon
proposal of the amount to be
paid by the Compensation
Committee to the Board of
Directors

・Corporate Directors other than Representative Directors
With regard to the amount of annual performance-linked compensation for Corporate Directors thatlinks to net income attributable to owners of parent and consolidated ROE, CEO makes a final decision
based on the resolution of the Board of Directors, within the scope of the bonus resolved at the General
Meeting of Shareholders. Such final decision is made in reference to the compensation standards ofindustry peers in Japan and overseas, provided by the external research organizations, and based on
the job responsibilities and performance evaluation(targets based on short-term and medium-term
management strategies) of each Director. Furthermore, in evaluating each Director and determining theamount of compensation, the Compensation Committee also verifies the appropriateness, with reference
to the advice from the external experts.

21

3. Medium-term performance-linked compensation<< Policies on composition and payment ratios on fixed basic compensation >>Medium-term performance-linked compensation is to award performance shares (stock-based
compensation) to inside Directors only, with the objective of motivating recipients to contribute toimproving medium-term business performance, as well as to share a shareholder perspective by holding
Company shares and raising awareness toward enhancing corporate value. The number of Company
shares awarded to each inside Director varies according to the payout rate based on the responsibilities
and performance goal achievement levels for the three-year covered period.
If the payout rate of medium-term performance-linked compensation is 100%, the payment
amount is set at around 30% to 100% of the fixed basic compensation, depending on responsibilities.
<< Calculation indicators and reason for choosing the indicators >>The calculation of medium-term performance-linked compensation uses consolidated operating
margin as an indicator of profitability in evaluating the achievement of performance targets, andconsolidated ROE as an indicator to represent capital efficiency, in order to link the compensation with
the Company’s Medium-Term Management Plan.
<< Calculation method and decision method >>(Formula for medium-term performance-linked compensation)
Share delivery point =“Reference points (set according to the scale of job responsibilities) x 70% x consolidated operating
margin attainment factor (*)”+“ Reference points (set according to the scale of job responsibilities) x 30% x Level of factors inconsolidated ROE attainment (*)”(*) Indicators to assess the degree of achievement of the performance goals for the targetperiod(three fiscal years) is the actual figures of consolidated operating margin and consolidated
ROE in the final fiscal year during the target period. Each attainment factor is variable in fivegrades of 0%, 50%, 75%, 100%, and 120%, depending on the target achievement level.
The number of TEL shares to be issued to inside Directors is determined by allocating one TEL shareper point and using the number of share delivery points calculated by the above formula; however, thenumber of shares to be issued per point will be adjusted when TEL executes a share split, allotment ofshare without contribution, share reverse split, etc.
The calculation formula, reference points used in such formula, and performance attainment factor
shall be determined by the Board of Directors based on the proposal of the Compensation Committee.
4. Non-performance-linked compensation
Non-performance-linked compensation is applicable to Outside Directors. For the Company’s Outside
Directors, the Company has introduced non-performance-linked stock-based compensation (restricted
stock units) as a system that is more consistent with their expected role of giving advice to the managementfrom the perspective for increasing corporate value over the medium- to long-term, in addition to the
management supervision. With regard to the amount paid, the amount is set at around 50% to 60% of the
fixed basic compensation to ensure appropriate balance between cash compensation and stock-based
compensation, and the Company shares shall be delivered after the expiration of the applicable period(three fiscal years).
The number of the Company shares to be delivered to Outside Directors shall be commensurate with
the number of share delivery points calculated based on the payment amount, where one point
corresponds to one Company share. In the event of share split, allotment without compensation, or shareconsolidation of the Company shares, the number of Company shares to be delivered for each point shallbe adjusted accordingly.

22

④ Shareholding guidelines
TEL established the Shareholding Guidelines (effective as of July 1, 2021), and management will ensure
continuous improvements to corporate value, and definitive sharing of profits with stakeholders. We haveset goals to, after these Guidelines come into effect or within 5 years of inauguration, retain TEL sharesequivalent to the values described below.
CEO

Inside Directors

Outside Directors

TEL Executive Officers

3 times fixed basic
compensation (annual
amount)2 times fixed basic
compensation (annual
amount)

1 times fixed basic
compensation (annual
amount)

1 times fixed basic
compensation (annual
amount)⑤ Clawback policy
TEL has enacted a Claw-back Policy (effective as of July 1, 2021) and if major corrections of financial
figures are deemed necessary due to intentional misconduct of Executive Directors, we will demand thereturn of annual performance-linked compensation and medium-term performance-linked compensation.
The compensation that will be subject to return will be the excess portion of performance-linked
compensation received during the fiscal year in which the misconduct was discovered, as well as suchcompensation received during the preceding 3 fiscal years.
⑥ Role of the Compensation Committee
In order to secure transparency and fairness in management and appropriateness ofcompensation
through our compensation system, the Company has established the Compensation Committee, which iscomprised of three or more Corporate Directors (excluding Representative Directors), including outside
Director. The Compensation Committee for the current fiscal year consisted of four members, comprising
2 inside Directors and 2 Independent Outside Directors, with an outside Director serving as the chairman.
Every meeting of the Compensation Committee was attended by an external expert. The Compensation
Committee utilizes advice from the external expert, compares wage levels with industry peers and othercompanies in Japan and abroad, analyzes the latest trends in Japan and abroad and best practices suchas reflecting ESG in compensation, and proposes a policy for compensation for Corporate Directors, acompensation system that is globally competitive and most appropriate for the Group, and individualcompensation amounts for the Representative Directors among other matters, to the Board of Directors.
(7) Initiatives directed at stimulating debate in the Board of Directors(Principle 4.8, 4.12, 4.13, Supplementary Principle 4.12.1, et al.)
TEL's Board of Directors secures ample time for holding deliberations. The Legal Department will handle
the secretariat functions of the Board of Directors, and will endeavor to ensure smooth meeting operationsand vitalization of deliberations by performing the following types of operations.
Furthermore, in terms of matters for referral to the Board of Directors, the Business Execution Meeting
fully considers and clarifies with the executive management the items that must be discussed by the Boardof Directors, with the Board of Directors focusing on growth strategy and enhancing corporate value.
Moreover, focused discussions on topics also of importance in the mid-term related to management
strategy and vision are conducted in off-site meetings held at venues away from the regular meeting placeof the Board of Directors.
◼ Engagement Status- Initiatives of meeting management
 Secure the appropriate amount of time for debate and strive to increase the attendance rate for all
Corporate Directors and Audit & Supervisory Board Members, including Outside members, bysetting an annual schedule for Board of Directors meetings.
 Distribute materials concerning agenda items to be discussed to attendees of Board of Directors
meeting in advance of the Board of Directors meeting. Also provide prior explanation in a timely
manner to Outside Directors and Outside Audit & Supervisory Board Members from theadministrative office.
23 Unify the support departments for Independent Outside Directors and Audit & Supervisory Board
Members into the Legal Department of the Company and timely communicate information necessary
for performing a task
 Strive to provide sufficient information to and dialog with Independent Outside Directors and Audit &Supervisory Board Members by establishing a venue for the exchange of opinions between TEL
executive management and Independent Outside Directors and Audit & Supervisory Board Members
beforehand, for matters of particular importance.
(8) Corporate Director training (Principle 4.14, Supplementary Principle 4.14.1, 4.14.2)
TEL provides Corporate Directors and Audit & Supervisory Board Members with opportunities to gain
further knowledge and engage in appropriate study as needed. Proper explanations of the TEL’s business,financial status, organization and other aspects are also provided to new Outside Directors and Outside
Audit & Supervisory Board Members when they assume the office.
(9) Evaluating the effectiveness of Board of Directors (Supplementary principle 4.11.3)
The results of audits by the Audit & Supervisory Board concerning the performance of duties by
Corporate Directors are reported in a Board of Directors. In addition to that, the Board of Directors
performs our own analysis and evaluation, debates the effectiveness of the Board of Directors based onan evaluation survey filled out by each Corporate Director and Audit & Supervisory Board Member fromthe end of the current fiscal year, and discloses a summary of the results each year. In regard to issues
that are recognized as a result of analysis and evaluation, the Board of Directors will endeavor to maketimely improvements based on the disucussions.
◼ Engagement Status
In evaluating the effectiveness of the Board of Directors during FY2021, we appointed a third-party
institution to offer advice for setting evaluation items, and to hold, aggregate, and analyze interviews.
We then exchanged opinions and held discussions between external directors and external Audit &Supervisory Board Members while referencing aggregation results and details of analyses.
Subsequently, this information was shared with, and discussed by, the Board of Directors, and adeliberation, and comprehensive evaluation, pertaining to the effectiveness of the Board of Directors,
including the Nominating Committee and the Compensation Committee, was performed. An overview
of the results has been published on the TEL website9.

4. Audit & Supervisory Board (Principle 4.4, Supplementary Principle 3.2.2)(1) Composition of the Audit & Supervisory Board
The Audit & Supervisory Board prescribes that there shall be Full-time Audit & Supervisory Board
Members with expertise in the TEL business and management system, and Outside Audit & Supervisory
Board Members with expertise in specialized areas such as law, finance and accounting, and capital
markets. Each of the Audit & Supervisory Board Members conducts audit activities based on the audit
policy and audit plans determined by the Audit & Supervisory Board, and they audit the directors' executionof their duties and the status of company property, etc., and supervise the soundness of management.
◼ Engagement Status
TEL’s Audit & Supervisory Board consists of 2 Full-time Audit & Supervisory Board Members, and 3
Independent Outside Audit & Supervisory Board Members（FY2022）.
(2) Auditor compensation
Compensation for Audit & Supervisory Board Members consists solely of fixed basic compensation, in
consideration of their role being primarily audit and supervision of management and it is determined bydiscussion of the Audit & Supervisory Board within the limit of total fixed basic compensation, which has
been resolved at the Annual General Meeting of Shareholders.
9

For details of Evaluating the effectiveness of Board of Director: https://www.tel.com/about/cg/
24

(3) Cooperation with Audit & Supervisory Board Members and executive management, the Internal
Audit Department, and the Accounting Auditors (Supplementary Principle 4.13.3, 3.2.2)
Audit and Supervisory Board Members coordinate closely with executive management, the internal audit
department, and the Accounting Auditors, and work to establish a structure that enables the performanceof an organized, effective, and efficient audit.
◼ Engagement Status
Cooperation with executive management: Regular meetings are held with Representative Directors.
Audit & Supervisory Board Members also attend management meetings, Business Execution
Meetings, and other important meetings, and exchange opinions with executive management as
appropriate.
Cooperation with the Internal Audit Department: Full-time Audit & Supervisory Board Members lead
cooperation through Audit Center reports (6 per year), etc.
Cooperation with Accounting Auditors: All Audit & Supervisory Board Members, including Outside
Audit & Supervisory Board Members, receive the audit plan for the current period from the Accounting
Auditors, receive an explanation of a summary of the auditing methods and key audit points, etc.,
receive reports about reviews Accounting Auditors, and audit results from the Accounting Auditors
quarterly and at fiscal year-end. If the Independent Accounting Auditors discover irregularities andrequest appropriate responses, or identify inadequacies or concerns, they will report these to the
executive officer in charge and the Audit & Supervisory Board Members as necessary, and theexecutive officer in charge will take the lead on investigating and correcting the problem and reporting
the results of that.
(4) Effectiveness of Audit by the Audit & Supervisory Board Members (Principle 4.11)
TEL collects information through on-site surveys through assignment of 2 Full-time Audit & Supervisory
Board Members. TEL also seeks proper coordination between the Internal Audit Department and the
Accounting Auditors and has established a structure that enables Audit & Supervisory Board Members to
obtain sufficient information necessary for audits.
In addition, TEL's Full-time Audit & Supervisory Board Members concurrently serve as auditors of major
subsidiaries and enhance the effectiveness of audits through such activities. Also, under way is working todevelop a Group audit structure, including Group auditor meetings with all Company auditors, auditors ofsubsidiaries, the head of the internal audit department, and the head of risk management, among otherparties, to share information and opinions.
◼ Engagement Status
The Audit & Supervisory Board meeting held 9 times in FY2021.
At present, the composition of Audit & Supervisory Board Members provides a good balance ofknowledge required for operational audits and accounting audits, including financial and accounting
knowledge, legal knowledge, and audit experience at other companies; hence, TEL believes that audit
by Audit & Supervisory Board Members of the TEL Group functions effectively.
Audits by Audit & Supervisory Board Members are implemented in accordance with the auditing
policies and audit plans established each fiscal year, and members attend important meetings, suchas Board of Directors meetings and Business Execution Meetings, to provide their opinions, andperform operational audits and accounting audits, among other tasks.

25

5. Internal Controls and Risk Management (Basic Policy on Internal Controls)(Principle 2.5, 4.3, 4.13, Supplementary Principle 2.5.1, 4.3.4, 4.13.3)
The TEL Group endeavors to strengthen effective internal controls to enhance corporate value andmaintain accountability in actions with respect to stakeholders.
TEL has appointed an executive officer in charge of Internal Controls and takes concrete action basedon the "Fundamental Policies concerning Internal Controls within the Tokyo Electron Group" set forth by
the Board of Directors. TEL also implements measures for "Internal Controls over Financial Reporting"pursuant to the Financial Instruments and Exchange Act of Japan. Furthermore, with respect to risk
management and compliance, TEL advances risk management and compliance activities under the
direction of the executive officer in charge. The status of these activities is periodically reported to theBoard of Directors by the executive officer in charge.
◼ Engagement Status
TEL has the following structure in place to ensure the proper performance of business, and endeavors
to enhance practicality and effectiveness.
① Compliance System(I) In accordance with "The Tokyo Electron Group Code of Ethics," and "Compliance Regulations,"
we work to ensure thorough awareness of, and thorough implementation of, compliance. "TheTokyo Electron Group Code of Ethics" was revised in May of 2020 in order to clarify its position
as a code of conduct, and we are working on the development of a stronger corporate ethics
and compliance structure.
(ii) Compliance-related education and training are provided according to positions or otherwise as acompulsory program to all executives and employees depending on the theme and topics. The
topics of the compliance education and training include corporate ethics and compliance,
prevention of bribery, competition law, Act against Delay in Payment of Subcontract Proceeds,
etc. to Subcontractors, export compliance, insider trading prevention, protection of personal
information, and prevention of harassment.
(iii) With the objective of bolstering compliance systems group-wide and at each group company, theTEL Group appointed Regional Compliance Controllers at major overseas sites and developed
an official reporting structure in which they directly report to the Chief Compliance Officer who
supervises the TEL Group's Compliance Department. They are working to implement measures
to prevent, detect and respond to compliance issues.
(iv) For early detection and early response to matters which may violate laws, regulations, or
principles of business ethics, TEL has a unified internal reporting system in Japan and overseas
in place, along with measures to ensure confidentiality and anonymity and prevent retaliation,
which are important principles in the operation of the system.
② Risk Management Structure(i) We established “Risk Management Regulations” and “Crisis Management Regulations,” andevaluate and analyze risks that encompass the Group. We periodically review the material risk
items that encompass the Group, promote necessary measures pertaining to material risks,periodically report the status of risk management activities to the Board of Directors and to Audit& Supervisory Board Members, and endeavor to reduce risks. Furthermore, in FY2021, wenewly established a Risk Management Committee with members such as General Managers ofeach Business Division and Presidents of TEL Group companies participating and engage inrisk management activities such as the implementation of continuous monitoring of select risk
items, under the guidance of the risk owners in each risk area.
(ii) The TEL Group has formulated business continuation plans that address risks like earthquakes,
and we are continuously engaged in efforts to review measures for realizing early recovery andsubstitute production at each base of operation.

26

(iii) With respect to our response to the global spread of the COVID-19 pandemic, the TEL Group,
centered primarily around the Emergency Response Headquarters helmed by the CEO,
continues to implement measures against COVID-19 by limiting travel to countries and regionswith high risks of infection, maintaining the supply chain, and ensuring thorough implementationof infection prevention measures at offices, among other efforts.
③ Internal Audit Department(i) The Internal Audit Department, Global Audit Center (14 members), was established as thedepartment operating under the direct control of the president, equipped with functions toperform internal control evaluations pertaining to operational audits and financial reports basedon the Financial Instruments and Exchange Act of Japan, and this Department is working to
expand its auditing functions.
(ii) Global Audit Center proposes annual audit implementation plans for operational audits inaccordance with TEL's Internal Audit Regulations, implements audits with respect to thedomestic and overseas bases of operation for the TEL Group, and provides reports on the
results of the audits at report meetings held for management, as well as for TEL’s Full-time Audit& Supervisory Board Members and domestic subsidiary Audit & Supervisory Board Members.
Further, we also have in place a structure for providing reports to the Board of Directors as well.
(iii) The Internal Audit Department and the Accounting Auditors engage in information exchanges
and opinion exchanges periodically or as needed, and both groups coordinate with each otherin order to ensure efficient and effective audits.
④ Management of Group Companies(i) Crucial decision-making for Group companies requires approval by TEL in accordance with TEL’s“Board of Directors rules" and "Authorization Charts."(ii) In revising the "Group Management Regulations," in addition to matters requiring TEL's approval,
we clarified matters to be reported to TEL, and are working to enhance Group company
management.
⑤ Performance of Duties by Directors(i) The Board of Directors determines important matters regarding the TEL Group’s management
and appoints Representative Directors, Executive Directors and executive officers for the
execution of their duties.
(ii) The Board of Directors receives regular reports at Board of Directors meetings regarding thestatus of execution of duties by Executive Directors including the CEO, and the status of
deliberations at Business Execution Meetings, and supervises the work performance statusapplicable to the TEL Group.
(iii) We are working to review the operations of the Board of Directors for TEL’s sustainable growthand enhancement of corporate value over the medium- to long-term, and we partially revised
the Board of Directors Regulations in FY2021.
⑥ Audit System of Audit & Supervisory Board Members(i) the Audit & Supervisory Board Members attend, as appropriate, Board of Directors meetings,
Business Execution Meetings, Ethics Committee meetings, as well as other important meetings,
and confirm the establishment of internal controls and the status of operations.
(ii) the Audit & Supervisory Board Members meet with the Accounting Auditors and domestic
subsidiary Audit & Supervisory Board Members in order to exchange information andcollaborate. Furthermore, TEL's Audit & Supervisory Board Members and domestic subsidiary
Audit & Supervisory Board Members periodically receive reports from the Internal Audit
Department (Global Audit Center).

27

6. Relationship to the Accounting Auditors (Principle 3.2, Supplementary Principle 3.2.1, 3.2.2)
TEL secures sufficient time to ensure proper audits by the Accounting Auditors; in addition regularmeetings are held between the CEO, executive officers in charge, and the Accounting Auditors.
Furthermore, not only does the Audit & Supervisory Board receive briefings from the Accounting
Auditors in accordance with the “Criteria for Evaluation and Selection of Accounting Auditors by the
Audit & Supervisory Board” (as separately established by the Audit & Supervisory Board itself), but it
also evaluates the performance of the Accounting Auditors through interviews with the TEL Accounting
Department to gather opinions on the performance of audits by the Accounting Auditors and othermatters. The evaluation checks the Accounting Auditors for appropriate quality control, their
independence and expertise, and the validity and efficiency of audits, as well as the effectiveness of
their communication with the Audit & Supervisory Board Members, executive management and theInternal Audit Department, among others.
◼ Engagement Status
With respect to accounting audits as set forth in the Financial Instruments and Exchange Act, since
FY2005, we have continuously entered into an auditing agreement with the KPMG AZSA LLC, as of
Accounting Auditors. We provide the KPMG AZSA LLC with various forms of information and data
during audits for given terms, and work to establish an environment that allows for the implementationof speedy and accurate audits.

28

Appendix1 Diagram of the corporate governance framework

29

Appendix2

March 1, 2021
Tokyo Electron Ltd.

Independence Requirements for Outside Directors and Outside Audit & Supervisory Board
Members
The board of directors of Tokyo Electron Ltd. (“Tokyo Electron”) has established the
independence requirement for outside directors and outside audit & supervisory board members(as defined under item 15 and 16, Article 2, of the Companies Act ) as follows.
The following persons shall not be considered independent if such person could cause a conflictof interest against the shareholders:1.

A person for whom Tokyo Electron is a Major Business Partner or a person who is a
Major Business Partner of Tokyo Electron, except for those who fall into 2. below;※ Under this 1., “A person for whom Tokyo Electron is a Major Business Partner” meansa person who, or a person who is a current employee or current executive officer of acompany that, has received payments from Tokyo Electron or its subsidiaries forproperty or services in an amount which, in the last three consecutive fiscal years, hasbeen the greater of 5% of recipient’s consolidated gross revenues, or 100 million yen,or more. If Tokyo Electron cannot reasonably know the amount of payments received
in certain fiscal years, the amount in the fiscal year available to Tokyo Electron isused. The same shall apply hereinafter.
※ “A person who is a Major Business Partner of Tokyo Electron” means a person who,or a person who is a current employee or current executive officer of a company that,has made payments to Tokyo Electron for property or services in an amount which, inthe last three consecutive fiscal years, has been 2% of Tokyo Electron’s consolidated
gross revenues or more, provided that in the case of a financial institution from which
Tokyo Electron borrows funds, it is indispensable for Tokyo Electron to fundraise andon which Tokyo Electron depends irreplaceably.

2.

A person who is a consultant, an accountant, or a lawyer who receives, or who works on afull-time basis at a firm which receives, a Large Amount of Money or Other Property
from Tokyo Electron or its subsidiaries, other than compensation for being a director oran audit & supervisory board member;※ “a Large Amount of Money or Other Property” means an amount of money or otherproperty which, in the last three consecutive fiscal years, has been the greater of 5%
of recipient’s consolidated gross revenues, or 10 million yen, or more. The same shallapply hereinafter.

3.

A person who has recently fallen under either of 1. or 2. above; or※ “A person who has recently fallen under either of 1. or 2. above” means a person who
could be substantially deemed to fall under either of 1. or 2. above. Concretely, itmeans a person who fell under 1. or 2. above at the time when the board of directorsof Tokyo Electron resolved the contents of agenda for the general shareholder
meeting, where such person is selected as an outside director or an outside audit &supervisory board member.

4.

A person whose Immediate Family Member (except for those who do not hold an
important position) falls under (a) through (d) below, provided that (c) below applies toan outside audit & supervisory board member only:

(a) a person who falls under any of (i) through (iii) below;(i) A person for whom Tokyo Electron is a Major Business Partner or a person who isa Major Business Partner of Tokyo Electron, except for those who fall into (ii)below;※ Under this (i), “A person for whom Tokyo Electron is a Major Business
Partner” means a person who, or a person who is a current employee or current
executive officer of a company that, has received payments from Tokyo
Electron for property or services in an amount which, in the last threeconsecutive fiscal years, has been the greater of 5% of recipient’s consolidated
gross revenues, or 100 million yen, or more.
※ “A person who is a Major Business Partner of Tokyo Electron” means a person
who, or a person who is a current employee or current executive officer of acompany that, has made payments to Tokyo Electron for property or services inan amount which, in the last three consecutive fiscal years, has been 2% ofTokyo Electron’s consolidated gross revenues or more, provided that in thecase of a financial institution from which Tokyo Electron borrows funds, it isindispensable for Tokyo Electron to fundraise and on which Tokyo Electron
depends irreplaceably.
(ii) A person who is a consultant, an accountant, or a lawyer who receives, or who
works on a full-time basis at a firm which receives, a Large Amount of Money or
Other Property from Tokyo Electron, other than compensation for being a director
or an audit & supervisory board member; or(iii) A person who has recently fallen under either of (i) or (ii) above:※“A person who has recently fallen under either of (i) or (ii) above” means a person
who could be substantially deemed to fall under either of (i) or (ii) above.
Concretely, it means a person who fell under (i) or (ii) above at the time when theboard of directors of Tokyo Electron resolved the contents of agenda for thegeneral shareholder meeting, where such person is selected as an outside director
or an outside audit & supervisory board member.
(b) an employee or an executive officer of subsidiary of Tokyo Electron;(c) a non-executive director of subsidiary of Tokyo Electron; or(d) a person who has recently fallen under (b) or (c) above or who was an employee
or an executive officer, or in the case of an outside audit & supervisory board
member, a non-executive officer, of Tokyo Electron:※ Whether an Immediate Family Member holds an important position or not shall be
determined according to ho item 7, paragraph 4, Article 74, of the Ordinance for
Enforcement of the Companies Act. For instance, with respect to 1. and 4.(a) (i)above, a director or an employee who is above head of department level of a business
partner company, and with respect to 2. and 4. (a) (ii) above, a certified public
accountant who belongs to an auditing firm and a lawyer (including associate lawyer)
who belongs to a law firm are considered to hold an important position.
※ “Immediate Family Member” means a relative within the second degree ofrelationship. If a person is no longer a relative within the second degree ofrelationship as a result of divorce, dissolution of adoption, or death, etc., such aperson shall not be considered as “Immediate Family Member”.

31Appendix3 Reasons for Appointing the CEO, Individual Corporate Directors and Audit &Supervisory Board Members; Status of Concurrent Duties at Other Listed
Companies【Principle 3.1.v, Supplementary Principle 4.11.2】

Corporate Director,
Chairman of the Board
Tetsuo Tsuneishi

Other than his involvement in the semiconductor manufacturing
equipment business of the Company, Mr. Tsuneishi has been
involved in management in a wide range of fields from IR, legal andbusiness strategies, and is equipped with ample experiences and aproven track record. We believe that with these many years ofexperiences he can contribute to decision making that leads toimproving shareholder value, and therefore nominated him as acorporate director.
(Status of Concurrent Duties at Other Listed Companies)
Corporate Director, Tokyo Electron Device Ltd.

Representative Director,

Having conducted global sales of semiconductor manufacturing
equipment and performing management duties in multiple business
units in this business, Mr. Kawai possesses ample experiences andrecord of achievement. In addition, he has demonstrated strong
leadership as CEO in executing management duties. We nominatedhim as a corporate director and the CEO with the expectation ofleveraging these experiences and achievement in decision-making
concerning the Group management policies at the board of
directors.

President ＆ CEO
Toshiki Kawai

Representative Director
Sadao Sasaki

Mr. Sasaki has performed management duties in marketing as wellas technological development and development for semiconductor
manufacturing equipment in the Company and a Group
manufacturing company, and possesses ample experiences andrecord of achievement. With the expectation of utilizing theseexperiences and achievement in bolstering the decision making
function of the board of directors, we nominated him as a corporate
director.

Corporate Director
Yoshikazu Nunokawa

Mr. Nunokawa has been involved in a wide range of fields in the
Company including sales, finance, and human resources, and isequipped with ample experience of serving as a Vice President &General Manager supervising the Administrative Division of Group
companies, as well as endeavoring to ensure sound andappropriate decision making on the Company’s management as an
Audit & Supervisory Board Member of the Company. With the
expectation of utilizing these experiences and achievement inbolstering the decision making function of the board of directors, we
nominated him as a corporate director.

Corporate Director
Tatsuya Nagakubo

Mr. Nagakubo has performed duties in the Company’s
Administration Division and through overseas postings, haspromoted the global expansion of the Company, holding ample
experiences and record of achievement. With the expectation ofutilizing these experiences and achievement in bolstering thedecision making function of the board of directors, we nominatedhim as a corporate director.

Corporate Director
Kiyoshi Sunohara

Mr. Sunohara has promoted global sales of semiconductor
manufacturing equipment and contributed to expanding the field
services business under his helm, holding ample experience andrecord of achievement. With the expectation of utilizing theseexperiences and achievement in bolstering the decision making
function of the board of directors, we nominated him as a corporate
director.

Corporate Director
Seisu Ikeda

Mr. Ikeda has been involved in management in multiple business
units in the semiconductor production equipment business and has
also worked for enhanced profit and share improvement, as well as
strengthening relationship with customers as General Manager ofthe Account Sales Division, holding ample experience and record ofachievement. With the expectation of utilizing these experiences
and achievement in bolstering the decision making function of theboard of directors, we nominated him as a corporate director.

Corporate Director
Yoshinobu Mitano

Mr. Mitano has been involved in sales, marketing, and management
duties in the principle business unit under the semiconductor
production equipment business of the Company, making large
contribution to the division’s growth so far, and possesses ample
experiences and record of achievement. With the expectation ofutilizing these experiences and achievement in bolstering thedecision making function of the board of directors, we nominatedhim as a corporate director.
After holding important positions of the U.S. government andworking at a law firm in the U.S., Mr. Charles Ditmars Lake II has
successively served in positions including Chairman and
Representative Director of Aflac Life Insurance Japan Ltd. andPresident of Aflac International, Incorporated, and he has a wealthof experience and knowledge as a corporate manager of companies
that cover both Japan and the U.S. We nominated him as an
Outside Director, expecting him to provide opinions and advice
regarding the Company’s corporate management in general fromthe perspective for increasing corporate value over the medium- tolong-term, in addition to the management supervision, by utilizing
his experience and knowledge.
(Status of Concurrent Duties at Other Listed Companies)
Chairman and Representative Director, Aflac Life Insurance Japan
Ltd. Note2
President, Aflac International, Incorporated Note2
Outside Director, Japan Post Holdings Co., Ltd.
Having served as President and Representative Director of
KEYENCE CORPORATION, Mr. Sasaki achieved substantial
improvements of corporate value and high profitability, engaged in
the global management of the company for many years. We
nominated him as an Outside Director, expecting him to provide
opinions and advice regarding the Company’s corporate
management in general from the perspective for increasing
corporate value over the medium- to long-term, in addition to the
management supervision, by utilizing his wealth of experience andknowledge as a corporate
manager.
(Status of Concurrent Duties at Other Listed Companies)
Director and Vice President, SHIFT, Inc.
Outside Director, ZUIKO CO., LTD.

Outside Director Independent
Charles Ditmars Lake II

Outside Director
Michio Sasaki

Independent

33

Outside Director
Makiko Eda

Independent

Having been involved in marketing in the Asia-Pacific region for Intel
Corporation, a major U.S. semiconductor manufacturer, Ms. Eda
possesses deep insight into the future and needs regarding thesemiconductors business. She also served as a President andRepresentative Director at the Japanese subsidiary of Intel
Corporation and has ample experience and extensive insight as acorporate manager. In addition, she serves as Chief Representative
Officer of the World Economic Forum Japan, exchanging wideranging opinion with leaders from various fields to work on solving
a variety of issues faced by international society. We nominated her
as an Outside Director, expecting her to provide opinions andadvice regarding the Company’s corporate management in generalfrom the perspective for increasing corporate value over the
medium- to long-term, in addition to the management supervision,
by utilizing her experience in the semiconductor industry as well as
global and multifaceted perspective. (Status of Concurrent Duties
at Other Listed Companies)
Chief Representative Officer, World Economic Forum Japan Note3
Outside Director, FUJIFILM Holdings Corporation.

Outside Director Independent
Sachiko Ichikawa

Having served as a Partner of Tanabe & Partners, Ms. Ichikawa
possesses ample experience and expertise as an attorney-at-law
mainly in corporate legal affairs. In addition, she also has global andadvanced specialization, holding qualifications as an attorney-atlaw in the State of New York, the U.S. and a U.S. certified public
accountant. We nominated her as an Outside Director, expecting
her to provide opinions and advice regarding the Company’s
corporate management in general from the perspective forincreasing corporate value over the medium- to long-term, in
addition to the management supervision, by utilizing her experience
above as well as knowledge in fields such as corporate governance,risk management, and compliance.
(Status of Concurrent Duties at Other Listed Companies)
Outside Director, Olympus Corporation

Audit & Supervisory Board
Member(Full time)
Yoshiteru Harada

Mr. Harada has extensive experiences in operations andmanagement, including supervision of the Administration Division of
the TEL Group as a GM. He possesses considerable knowledge offinance and accounting. Since assuming the position of Audit &Supervisory Board Member of TEL, he has served as thechairperson of the Audit & Supervisory Board and provided
appropriate advice, contributing to improving the efficiency of auditof the Audit & Supervisory Board as a whole.We nominated him as
an Audit & Supervisory Board Member, since we believe that he canappropriately execute his duties as an Audit & Supervisory Board
Member with these experiences and expertise.

Audit & Supervisory Board
Member(Full time)

Having served in various managerial positions including Vice
President & General Manager of the Technology Development
Division and the Production Division, he has abundant experienceand knowledge related to technology and management. Since webelieve that he can conduct highly effective audit of the overallmanagement and in the field of technology of the Group as an Audit& Supervisory Board Member, we nominated him as an Audit &Supervisory Board Member.

Kazushi Tahara

34

Outside Audit & Supervisory
Board Member
Independent
Kyosuke Wagai

Outside Audit & Supervisory
Board Member
Independent
Masataka Hama

Having served as a certified public accountant at an auditing firm
for a long time, Mr. Wagai reflects his ample expertise in financeand accounting, as well as knowledge in auditing and related fields,in the Company’s audits. At meetings of the Board of Directors andthe Audit & Supervisory Board of the Company, he has contributed
to the Company’s audits such as by providing opinions and advice
on matters including information security. We nominated him as an
Outside Audit & Supervisory Board Member with a view tocontinually utilizing his experience and insight while objectively
ensuring the appropriateness of audits. (Status of Concurrent
Duties at Other Listed Companies)
Outside Audit & Supervisory Board Member, MochidaPharmaceutical Co., Ltd.
Mr. Hama has a wealth of experience in corporate management
gained through years of wide-ranging experiences in the financeindustry, along with adequate expertise in finance and accounting.
We nominated him as an outside Audit & Supervisory Board
Member with a view to utilizing his experience and insight while
objectively ensuring the appropriateness of audits.

Having served as Partner in a major law firm and currently working
as Partner at Miura & Partners Legal Profession Corporation, Mr.
Miura has a wealth of experience and expertise as an attorney
Independentprimarily in the areas of corporate legal affairs. We nominated him
Ryota Miuraas an outside Audit & Supervisory Board Member with a view toutilizing his experience and expertise while objectively ensuring theappropriateness of audits.
(Status of Concurrent Duties at Other Listed Companies)
Corporate Auditor, TECHMATRIX CORPORATION
Outside Director, Eisai Co., Ltd.
(Note 1) TEL has notified the Tokyo Stock Exchange that Outside Directors Charles Ditmars Lake II,
Michio Sasaki, Makiko Eda and Sachiko Ichikawa and Audit & Supervisory Board Members Kyosuke
Wagai, Masataka Hama and Ryota Miura have been appointed as Independent Directors and Independent
Audit & Supervisory Board Members, as they meet TEL's criteria for judging independence,“Independence Requirements for Outside Directors and Outside Audit & Supervisory Board Members”;
these criteria that were established based on the requirements for Independent Standards set forth by the
Tokyo Stock Exchange.
(Note 2) Aflac Life Insurance Japan Ltd. and Aflac International, Incorporated are unlisted companies, but
as Outside Director Charles Ditmars Lake II serves as their chairman and representative director andpresident, respectively, in Japan, this is mentioned here.
(Note 3) World Economic Forum Japan is not listed company, but as Outside Director Makiko Eda serves
as their Chief Representative Officer, this is mentioned here.
Outside Audit & Supervisory
Board Member

35Appendix4 Skill Matrix and Board Diversity【Principle 4.11, Supplementary Principle 4.11.1】(Note) The six categories of “expertise and experience” are defined as follows:・Corporate management:
Having experience in managing an enterprise (experience serving as a representative director orchairperson/president)
・ Semiconductor/FPD:
Having knowledge on semiconductor/FPD-related industries
・ Manufacturing/development:
Having knowledge/experience in manufacturing and development at our company and othermanufacturers
・ Sales/marketing:
Having knowledge/experience in sales and marketing at our company and other manufacturers.
・ Finance, accounting/engagement with capital markets:
Having knowledge in financial accounting and M&A, or knowledge/experience in engagement with capital
markets
・ Legal affairs/risk management:
Having knowledge of legal affairs, compliance, and risk management36