Corporate GovernanceFundamental Stance on Corporate GovernanceAmid progressive globalization of business management,
the fundamental policy and purpose of our corporate
governance activities is to achieve thorough adherence to
our corporate ethics and laws and regulations, to establish
and strengthen our internal control and risk management
systems, and to maintain transparency and objectivity in ourbusiness. Our ultimate goal is to promote management thatis focused on building corporate value for shareholders andall other stakeholders.

The following is an outline of the Company’s corporate
governance organization.
Corporate Governance Organization Chart
Annual Shareholders’ Meeting

Board ofDirectors

At the annual shareholders’ meeting held in June 2002, theCompany shortened the term of office for directors to one
year from two to enable a faster response to changes in ourbusiness environment and to further clarify management
responsibilities.

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Tokyo Electron

www.tel.com

Independent Auditor

President
Audit andimprovement
reportRequest for
Improvement

Audit

Executive Officers
ReportRequest for
Improvement
Audit

Risk Management Function

ReportOther Activities
As a company with shareholder-oriented management, theCompany discloses personal compensation received by our
two representative directors in our “Notice of Annual
General Meeting of Shareholders” from the standpoint of
the importance of shareholders’ acknowledging ourbusiness activities as being transparent.

Statutory Auditors

Confirms the progressof improvement
and gives instructions

Corporate Governance Measures
In the past the Company has separated the functions of ourboard of directors and executive body. In April 2003,
however, the Company further clarified their roles byintroducing an executive officers system, enabling anorganization that is quicker in formulating and implementingstrategies. The major functions of the board of directors are
now clearly defined as 1) deciding basic managementpolicies, 2) considering and deciding fundamental businessstrategies proposed by executive officers, and 3)
overseeing and assessing group management.
Compensation and Nomination Committees
Aiming to implement improvements in corporate
governance from within our own company organization, theCompany has created Compensation and Nomination
Committees within our board of directors. The
Compensation Committee determines compensation forthe president, while the Nomination Committee, composedof three directors other than the president, selects
candidates to be elected as directors at the annual
shareholders’ meeting and a candidate to be elected aspresident by the board of directors.

Nomination Committee
Compensation Committee
Chief Business Ethics Director

Monitoring

Monitoring

Internal Audit Dept.

ReportCheckand balance
Business Depts.

Audit

Administrative Depts.

Audit

Internal Control and Risk Management Systems
Our guiding principles are to maintain a high standard ofbusiness ethics throughout our activities and comply withlaws and international regulations. Accordingly, theCompany has appointed a director in charge of businessethics and established a code of ethics to thoroughly
implement business ethics companywide.
Reaffirming the importance of establishing proper internal
control and risk management systems, the Company has
upgraded the internal auditing functions of the Internal
Audit Department and established a new section within theGeneral Affairs Department responsible for managing
business, operating and other risks. Moreover, efforts arebeing made to develop the internal regulations required to
manage these risks, and to carry out activities to educate
and raise employees’ awareness of these issues.