M a n ag e ment R eport

C o r p o r a t e G ove r n a n c e

Corporate Governance
The Tokyo Electron Group continually works to improve its corporate governance practices
through various measures to ensure its business is operated in a way that maximizes the Group’s
corporate value.
Fundamental Policy Concerning Corporate
Governance

Establishing Even More Effective Internal Control
Systems

The Tokyo Electron Group recognizes the importance of enhancing

We are implementing internal control practices in line with our basic

corporate governance in order to maximize its corporate value for all

policies on internal controls, which were formulated in May 2006 and partly

stakeholders. With this recognition, we are committed to complying withrevised in April 2008. In addition, we are working to meet the requirements

corporate ethics and compliance programs. We are also dedicated toof an internal control system for financial reporting under the Financial

improving and reinforcing internal control and risk management systems,

Instruments and Exchange Act. In June 2008, we appointed the Chiefand to maintaining transparency and objectivity in our business activities.

Internal Control Director to further solidify our internal control systems.

The Framework of Corporate GovernanceInternal control systems

We develop and maintain an optimal and effective corporate

1. Compliance systemgovernance system guided by the following three basic principles:

HIGHLIGHTs

2. Risk management system

1) ensuring the transparency and soundness of business

3. System to ensure the appropriateness of financial reportingmanagement;
2) facilitating quick decision-making and the efficient execution of

4. System to store and manage information
5. System to ensure the efficiency of business execution

business management; and6. System to ensure appropriate business operations of thecorporate Group3) timely and suitable disclosure of information.
Specifically, the Board of Directors comprises 14 directors,

7. System to ensure the effectiveness of internal audits

including three external directors. The Board has two committees
to strengthen corporate governance: the Compensation Committee

1

MANAGEMENT Report

and the Nomination Committee2. The term of office for directors

Framework for Corporate Governance,
Internal Controls and Risk Management

is set at one year to allow prompt and flexible responses tochanges in the management environment. We have four statutory
auditors, two of whom are from outside the company. Statutory

Annual Shareholders’ Meeting

auditors attend important meetings including board meetings,
evaluate the performance of operational and financial audits andrisk management, and audit the performance of directors. In theexecution of business, we have introduced the executive officer

Nomination Committee
Board of Compensation Committee
Directors Chief Business Ethics Director

Statutory
Auditors

IndependentAuditors

Chief Internal Control Director

system to clearly separate the roles of the Board of Directors andof those actually executing business operations. We plan andEHS Reportimplement business strategies promptly under this system.
1 Compensation Committee: Makes a draft remuneration plan for the Chairman &CEO and the President & COO and presents the draft to the Board of Directors.
2 Nomination Committee: Selects candidates for directorships for submission tothe annual shareholders’ meeting and a candidate to be elected as president by theBoard of Directors.

Internal Controls and Risk Management
We have our Global Audit Center for internal controls. This Center

ReportRequest for
improvements

SOCIAL Reportand evaluates the effectiveness of the Group’s internal control systems.
Results of the evaluation may lead to the Center’s provision of support forimprovements to relevant departments and sites. In addition, the Center
makes regular reports to management on the audit results and meets withstatutory auditors periodically for information sharing and reporting.
To implement measures to manage risks, including business andoperational risks, we have established a department in charge of risk
management and this creates and revises in-house rules on risk management
and conducts risk-related education and awareness-raising activities.

14TOKYO ELECTRON Environmental and Social Report 2008

Audit and improvement reports

Request for
improvements
ReportExecutive Officers

Reportconducts internal audits on business operations, compliance and systems
targeting Tokyo Electron Group’s bases both in Japan and overseas,

Confirms the progress of improvements andprovides instruction

RepresentativeDirectors

Report

Audit

Risk Management
Function
Monitoring

Audit

Monitoring

Checks and balances

Business Dept.

Internal Audit Dept.
(Global Audit Center)

Request for
improvements

Request forimprovements

Administrative
Dept.

Audit

Audit

ComplianceApproach to Corporate Ethics and Legal
Compliancerevised the booklet describing the Code of Ethics and the provisionsTrust is and will always be the lifeline of the Tokyo Electron Group.

thereof in a question-and answer format, and we distributed theThe fundamental requirements for maintaining trust are rigorous

booklet to each of the directors and employees of the Group.

To facilitate in-depth understanding of the Code of Ethics, we also

C o m p li a n c e

The Tokyo Electron Group conducts fair and trustworthy business activities in strict compliancewith corporate ethics, laws and regulations.

conformity to our ethical standards and compliance with the law, by
our employees as individuals, and by each of our organizations. WeMeasures to Strengthen the Compliance Systemgive first priority to compliance with high ethical standards and laws

We established our Compliance Regulations in 2004 (and revisedin conducting our business operations.

some provisions in 2008). The Regulations, which provide for basic
matters concerning compliance, are designed to help those engaged

Establishing Ethical Standards

in the business operations of the Tokyo Electron Group to understand

We believe that common standards must be applied throughout ourfully the relevant laws, regulations and international rules as well asdivisions in order to create the globally excellent company that wein-house rules, and act accordingly at all times.
We also have a hotline (internal reporting system) for employees

describes our basic views. At the same time, we established theand others to report questionable actions in light of the Code of

Ethics Committee as an organization for actual operations.

Ethics, applicable laws, regulations and other relevant rules.

In June 2007, in response to the results of a survey conducted on

Reported concerns are handled by the director in charge ofethical matters and the chairman of the Ethics Committee (on thewe revised our Code of Ethics, including adding items and modifying

matters regarding the Code of Ethics) or by the Director of theexpressions, to make them easier to understand and more consistent

General Affairs Department in a fair and sincere manner with duewith the current business environment and sense of ethics.

whistleblower protection.
We provide compliance-related information on the Company

The Code of Ethics of Tokyo Electron Group
Introduction

intranet and give employees web-based education to ensure that theyI. Principles
1. Compliance with Applicable Laws
2. Acting in Accordance with Social Conscience
3. Maintaining Harmonious Relationships with Local
Communities

importance, thereby further strengthening our compliance system.

II-2 Fair Trade
7. Implementing Fair and Open Competition
8. Fair Business with Suppliers
9. Handling of Confidential Information
10. Strict Export/Import Controls
11. Reasonable Exchanges of Gifts and Entertainment within
the Bounds of Common Sense

III. Being a Good Corporate Citizen
15. Prohibition of Insider Trading
16. Prohibition of Political Activities and Contributions
17. Prohibition of Involvement in Antisocial Forces
18. Respect for Individuals
Implementation of the Code of Ethics1

Leakage of personal information has become a major social concern
in recent years and companies are required to manage the personal
information they hold in an appropriate manner.
In Japan, following the enforcement of the Act on the Protectionof Personal Information in April 2005, the Tokyo Electron Group
formulated its basic policies, rules, and guidelines for the protectionof personal information and developed related manuals and otherdocuments. We provide web-based training programs to educate
employees on the implementation of such policies and rules andraise their awareness of these policies and rules by providing
relevant information via the intranet. Furthermore, in Japan weinvestigated personal information stored on PCs leased to employees
to understand the current status of how personal information isbeing treated.
We also take a range of measures to ensure proper managementof personal information such as with the installation of exclusive
servers that store personal information only; by controlling access toPCs for employees’ individual use with IC cards; periodical changesof passwords; introduction of encryption; and use of auxiliary storage

SOCIAL ReportII-3 Relationship between the Company and Individuals
12. Prohibition of Conduct Causing Conflicts of Interests
13. Prohibition of Improper Use of Company Assets
14. Prohibition of Conduct of Harassment

Protection of Personal Information

EHS Report

II. Honest and Fair Business Activities
II-1 Technology, Safety and the Environment
4. Ensuring Safety and Pursuing Quality
5. Promoting Environmental Preservation Activities
6. Ethics in Manufacturing

all understand our compliance policies and are more aware of their

MANAGEMENT Report

our Code of Ethics and compliance measures in the Group in 2005,

HIGHLIGHTs

envision. In 1998, we established a Code of Ethics, which concretely

devices with password-based access control.

1 The “Implementation” section provides specific matters and procedures.

TOKYO ELECTRON Environmental and Social Report 200815