Corporate Governance
Against a backdrop of ongoing business globalization, Tokyo Electron Group maintains a management
philosophy that puts emphasis on improving corporate value for all its stakeholders. To this end, the Company
considers it important to strengthen corporate governance. The TEL Group is building a highly effective,
optimized corporate governance structure, and upgrading and strengthening its internal control system and risk
management system
corporate directors consists of a monthly fixed remuneration
and a performance linked compensation, and the compensation
for audit & supervisory board members consists only of amonthly fixed remuneration, to maintain independence frommanagement. Retirement allowance systems, which constituted
a significant part of fixed compensation for corporate directors
and audit & supervisory board members with a strong monthly
fixed remuneration, have been abolished since the 43rd Annual
Shareholders’ Meeting (Fiscal Year of 2006, March).

Corporate governanceTokyo Electron is endeavoring to establish and operate optimaland highly effective structures of governance based on its threebasic principles: (1) Ensure the transparency and soundnessof business operations; (2) Facilitate quick decision-making
and the efficient execution of business operations; and (3)Disclose information in a timely and suitable manner.

The corporate governance framework

The Board of Directors

Tokyo Electron uses the audit & supervisory board system
based on the Companies Act of Japan, and furthermore
has established its own Nomination Committee*1 andCompensation Committee*2 to increase the transparency andobjectivity of management. The Company has also adopted
the executive officer system to facilitate quick decision-making.
Moreover, Tokyo Electron has been disclosing the individual
remunerations of representative directors since 1999 inrecognition of the importance of managerial transparency forshareholders.
The executive compensation program for corporate directors
and audit & supervisory board members was adopted with theintention of tying compensation more closely to financial results
and shareholder value, raising corporate competitiveness, andenhancing management transparency. The compensation for

The Board of Directors consists of nine directors, two ofwhom are outside directors. Directors serve one year terms
in order to ensure that Tokyo Electron can respond quickly
to changing business conditions, and to more clearly definemanagement accountability.

The Audit & Supervisory Board
Tokyo Electron has four audit & supervisory board members,
three of whom are outside audit & supervisory board
members. The audit & supervisory board members not
only attend meetings of the Board of Directors, the Top
Management Conference and other important businessmeetings, but also conduct operations audits and accounting
audits, evaluate risk management, and audit the performanceof duties by directors.

Diagram of the Corporate Governance Framework, Internal Control System and Risk Management System
Shareholders’ Meeting
Audit &Supervisory Board

Board of Directors· Compensation Committee · Chief Business Ethics Director · Chief CSR Promotion Director· Nomination Committee· Chief Internal Control Director

Request for improvement/ReportCompliance & Internal Control Executive Officer
CSR Promotion Executive Officer

Committees· Ethics Committee· Information Security Committee· Export Trade Control Committee
CSR Promotion Council

Representative
Directors

Independent Auditors

Confirm the progress ofimprovements and give instructions

Audit and improvement reports
Request for
improvement/Report

ExecutiveOfficers

Request for
improvement/Report

Internal Audit Dept. (Global Audit Center)

Audit

Risk Management & Internal Control
Function (General Affairs Dept.)
Request for
Monitoring
improvement/Report

Administrative Depts.

| Glossary |8

Check and balance

Business Depts.

*1 Nomination Committee: This committee nominates candidates for directors and a candidate for CEO, which it submits at the meeting of the Board of Directors for approval.
*2 Compensation Committee: This committee develops proposals on the executive compensation program and the compensation to be paid to representative directors,
which it submits at the meeting of the Board of Directors for approval.

Approach to CSR

Main initiatives for fiscal 2014

The Tokyo Electron Group believes that achieving sound andcontinuous growth as a business enterprise is our primary
responsibility for contributing to social development throughthe provision of leading-edge products, technologies, andservices. To achieve this, not only must we provide highquality products and services, but we must be a company
that is esteemed from the perspectives of good-faith andfair corporate activities, pursuit of safety and environmental
preservation, respect for human rights and ethics, crisis
management, corporate governance, and compliance. TheTokyo Electron Group will continue to carry out initiatives
based on its CSR Policy and in response to the opinions ofour many stakeholders.

In 2013, we established a specialized CSR department
and appointed a CSR Promotion Director to the company
in order to create a structure of governance that directly
connects CSR to management. Briefings were held in Japan
as well as key locations in Asia and the West to promote
CSR and establish a company-wide CSR foundation. At thenewly established CSR promotion meeting consisting of theseven CSR promotion departments and related directors,
we identified CSR objectives for individual departments,
established benchmarks to measure progress, and thenbegan targeted measures to achieve our goals.
In January 2014, a visiting lecturer gave a seminar onthe EICC® Code of Conduct published by EICC®*, a CSR
promotional organization for the electronics industry. About
130 people affiliated with CSR promotion attended thelecture via video conferencing with the head office andlocations in Japan and overseas.

CSR Promotion Framework

President & CEO
Chief CSR Promotion Director
CSR Promotion Executive Officer
CSR/Ethics/Personnel/Safety/Quality/Environment/Procurement

CSR Promotion Council
TEL Group companies in and outside Japan(19 locations worldwide)
EICC® internal seminar

TEL Group CSR Policy
1. Corporate Activities
The Tokyo Electron Group will provide safe and high-quality
products and services to customers around the world andcontribute to the realization of an enriched society.
2. Business Ethics
The Tokyo Electron Group acts in compliance with the laws andregulations of each country, international regulations, and inaccordance with strict business ethics. We do not engage in any
conduct that impedes fair and open market competition.

3. Respect for Individuals
The Tokyo Electron Group respects the character and individualityof each person. We recognize the diversity of employees, sharea sense of mission, and promote the development of workplaces
with vitality.
| Glossary |4. Environment
The Tokyo Electron Group seeks to achieve harmony with theglobal environment. We strive to reduce our own impact on theenvironment and contribute to reducing the environmental impactof customers by developing and providing eco-friendly products.
5. Communication with Stakeholders
The Tokyo Electron Group discloses information relating to theGroup in a fair, impartial, and timely manner, strives to engage in
two-way communications, and works to meet the expectations ofstakeholders appropriately.

6. Social Contribution
The Tokyo Electron Group engages in social contribution activities
worldwide as a good corporate citizen to contribute to thedevelopment of local communities and society.

* EICC®: Electronic Industry Citizenship Coalition®, an organization that sets forth a code of conduct for labor, safety and the environment for supply chains within
the electronics industry.
“EICC” and “Electronic Industry Citizenship Coalition” are registered trademarks of Electronic Industry Citizenship Coalition Incorporated.

9Corporate GovernanceInternal control/risk management
In order to enhance the TEL Group’s corporate value,
and also accept responsibility for our behavior towards all
stakeholders, we are making efforts to strengthen viableinternal control. We are implementing practical measuresin line with the Fundamental Policies concerning Internal
Controls within the Tokyo Electron Group set down by
the Company’s Board of Directors. In addition, we areconducting actions for internal control over financial reporting
based on the Financial Instruments and Exchange Law.

Risk management system
To more effectively strengthen the internal control and risk
management systems of the entire TEL Group, under aCompliance & Internal Control Executive Officer, we haveestablished a dedicated risk management and internal
control function within the General Affairs Department.
This function evaluates and analyzes risks that could affect
the TEL Group, and works to reduce these major risks
by promoting the necessary measures. The status of risk
management activities is reported regularly to the Board ofDirectors.
In addition, the Information Security Committee andExport Trade Control Committee were established, in order
to better enhance confidential information management andthe export-related compliance system.

Internal audit department
The Global Audit Center is the internal audit department of
the TEL Group. The Global Audit Center is responsible for
auditing the business activities of the Group’s domestic andoverseas bases, as well as their compliance and systems,
and evaluating the effectiveness of internal control systems.
As necessary, the Global Audit Center also provides
guidance to operating divisions.

10Business continuity management
The TEL Group made an overall review of its BusinessContinuity Plan (BCP) from fiscal 2013. Tokyo Electron’s
Head Office redeveloped its BCP in fiscal 2013 to respond tolarge-scale earthquakes. From fiscal 2014, the BCP is being
built at the plant and office-level by reviewing measures for afast recovery in a time of disaster, and alternate production.
In addition, the TEL Group carries out an annual BCP drill
involving an earthquake scenario. Emergency supplies suchas food and drinkable water, and first-aid outfits for timesof disaster, are made available at all times, and thoroughmeasures involving a disaster scenario are carried out for
the key systems across the entire Group.

A BCP drill

Information security
Under the TEL Group Information Security Policy and theRegulation for Management of Technical and BusinessInformation, Tokyo Electron has put in place a framework forpreventing information leaks to ensure appropriate management
and safe and effective utilization of information assets.
In order to strengthen management of technical andbusiness information across the Group, suitable operation
rules are reviewed, and we regularly hold web-based
education for all executives and employees of Group
companies in Japan. These measures will be spread in thesame way to overseas Group companies. Contracts related
to information security will also be suitably reviewed, andwith the goal of becoming familiarized with the contracts
and comply thoroughly, we obtain consent for contract
compliance – every year from all executives and employees
of TEL Group companies including overseas.
In addition, a report system is established for accidents
that lead to information leaks and problems (incidents) withthat risk. Contents of the reports include prompt responses
to each problem, and through analysis they are reflected incompany-wide efforts and measures. In addition to these,
information security related efforts such as information
system security measures and operational management
self-assessment within the TEL Group are being carried out.

Business ethics and compliance
Stakeholder trust is the cornerstone of business activities. Inorder to maintain trust, it is necessary to continuously act inrigorous conformity to business ethics and compliance. In linewith the Fundamental Policies concerning Internal Controls
within the TEL Group, all Group executives and employees arerequired to maintain high standards of ethics and to act with aclear awareness of compliance.

Business ethics
In 1998, Tokyo Electron formulated The Code of Ethics ofthe Tokyo Electron Group to establish uniform standards togovern all of its global business activities. In the same year,
the company appointed a Chief Business Ethics Director andestablished the Ethics Committee, which is responsible forpromoting business ethics awareness throughout the TELGroup. The Ethics Committee comprises the Chief Business
Ethics Director, the Ethics Committee Chairman, andpresidents of major Group companies in and outside Japan.
The members meet semiannually, report on ethics-related
issues faced by each company, and discuss measures tofurther improve ethical behavior and compliance.
The Code and its Q&A section are published in Japanese,
English, Korean and Chinese, and the company distributes
it to all Group executives and employees, including thoseoverseas. Moreover, the Code is appropriately reviewed andrevised in response to changes in environmental and social
demands.

Compliance education
Through the TEL Group’s e-learning system, we provide acommon web based training program covering the basics
of compliance, internal control, export-related compliance,and other topics, which all executives and employees arerequired to complete, as well as a web based training
program on insider trading and other subjects suited to one’s
position and job role.
In fiscal 2014, with the goal of greater understanding for
new compliance problems (such as the use of social media,and anti-corruption), web-based, test-format education
on business ethics and compliance was carried out for all
Group executives and employees in Japan. It was also
spread to overseas Group companies. All employees
involved with Group companies in Japan completed thelessons, and of the overseas Group company employees,
more than 80% are finished (as of May 2014). These efforts
will be continued in fiscal 2015.

Internal reporting system
In the event that an employee becomes aware of any activity
which may violate a law, regulation or principle of businessethics, the TEL Group operates an internal reporting systemthat employees may use to report their concerns. The entire
Group has established an ethics hotline and a compliancehotline, and this reporting system is also in place at eachoverseas base. In all cases, this system ensures that strict
confidentiality is maintained to protect the whistleblowers
and ensure that they are not subject to any disadvantage orrepercussions.

Compliance system
Tokyo Electron has appointed a Compliance & Internal
Control Executive Officer from among the executive
officers to raise awareness of compliance across the TELGroup and further improve its implementation. Also, Tokyo
Electron has drawn up the Compliance Regulations settingout basic compliance-related requirements in line with theCode. The Compliance Regulations are intended to ensurethat all individuals who take part in the business activities
for the TEL Group clearly understand the pertinent laws,
international standards and internal company rules, andconsistently apply these rules in all of their activities.

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