Management Report
The Tokyo Electron Group is strengthening its corporate governance aswell as improving and reinforcing its internal control system and riskmanagement system with the aim of maximizing its corporate value.

Corporate Governance• Corporate governance policies• Internal control and risk management systems

In order to maximize corporate value and enhance shareholder

To more effectively strengthen the internal control and risk management systems of thesatisfaction, the Tokyo Electron Group is endeavoring to establish andTokyo Electron Group, we are implementing practical measures in line with the Funda-operate optimal and highly effective structures of governance based on

mental Policies Concerning Internal Controls within the Tokyo Electron Group. We haveits three basic principles: 1) Ensure the transparency and soundness

also established the Risk Management & Internal Control Department, which evaluatesof business operations; 2) Facilitate quick decision-making andand analyzes risks that could affect the Group. Important risks are mitigated, and thethe efficient execution of business operations; and 3) Disclose

status of risk management activities is reported regularly to the Board of Directors.

information in a timely and suitable manner.

• Risk management initiatives• Corporate governance framework

1 Information security

Tokyo Electron uses the statutory auditor system based on the Companies

Tokyo Electron has a framework in place to prevent any IT system-related inci-

Act of Japan, and furthermore has established its own Nomination

dents from occurring under the TEL Group Information Security Policy. We have

Committee*1 and Compensation Committee*2 to raise the transparency

also established the Regulation for Management of Technical and Businessand objectivity of management. The company has also adopted theInformation common to the Group in order to ensure management of confiden-executive officer system to streamline the decision-making process.

tial information and the safe and effective utilization of information assets.

Moreover, Tokyo Electron has been disclosing the individual remunerationof representative directors since 1999 in recognition of the importance ofmanagerial transparency for shareholders.
*1 Nomination Committee: This committee nominates candidates for directors and acandidate for CEO, which it submits at the Board meeting for approval.
*2 Compensation Committee: This committee proposes the remuneration to be paid torepresentative directors at the Board meeting for approval.

• Board of Directors

2 Export trade control
We are working to reinforce our export compliance system by setting up anorganization responsible for export trade control throughout the Group and bydefining Security Trade Regulations. We also regularly organize meetings toexplain export control and provide web-based training for Group employees.

3 Business continuity management (BCM)

The Board of Directors consists of 14 members, two of whom are outside
directors. In order to ensure that Tokyo Electron can respond quickly tochanging business conditions, and to more clearly define managementaccountability, the term of office for directors is set at one year.

In order to fulfill our social responsibility by ensuring business continuity at
the time of an emergency, such as an earthquake or other major disaster or
during an outbreak of an infectious disease, we have formulated a BusinessContinuity Plan (BCP) and review it as necessary. In May 2012, we executed aBCP drill based on scenarios concerning a major earthquake hitting Tokyo.

• Board of Statutory Auditors
Tokyo Electron has four statutory auditors, two of whom are outside auditors.
The statutory auditors not only attend meetings of the Board of Directors,
the Top Management Conference and other important business meetings,
but also conduct operations audits and accounting audits, and evaluate risk
management, in addition to auditing the performance of duties by directors.

• Audits by the internal audit department
The Global Audit Center, which is the internal audit department of theGroup, is responsible for auditing the business activities of the Group’s
domestic and overseas bases, as well as their compliance and systems, andevaluating the effectiveness of internal control systems. When necessary,
the Global Audit Center also provides guidance to operating divisions.

Diagram of the Corporate Governance Framework, Internal Control System and Risk Management System
Annual Shareholders’ Meeting• Compensation Committee• Nomination Committee

Board of Directors• Chief Business Ethics Director• Chief Internal Control Director

Statutory Auditors

Independent Auditors

Confirm the progress of improvements and give instructions

Representative Directors

Request for improvement/ReportCompliance & Internal Control Executive Officer

Audit and improvement reports

Request for improvement/Report

Executive Officers

Internal Audit Dept. (Global Audit Center)• Ethics Committee • Information Security Committee

Committees • Export Trade Control Committee

Request for improvement/Report

Risk Management & Internal Control Dept.
Request for improvement/Report

Business Depts.

12Audit

Monitoring

Check and balance

Administrative Depts.