Introduction Our Strategy Our Performance Sustainability Governance Information
Board of Directors
Newly Elected Newly Elected Yoshiaki Yoshida Osamu Karatsu Koichi Tsukui Douglas Lefever
Representative Director, President and CEO Outside Director Director, Managing Executive Officer Director, Managing Executive Officer
Date of Appointment 2013 Date of Appointment 2012 Date of Appointment 2020 Date of Appointment 2020 Date of birth February 8, 1958 Date of birth April 25, 1947 Date of birth December 11, 1964 Date of birth December 10, 1970 Nationality Japanese Nationality Japanese Nationality Japanese Nationality American Shares Held as of Shares Held as of Shares Held as of Shares Held as of March 2020 48,056 March 2020 3,056 March 2020 1,853 March 2020 0
14/14 14/14 14/14
Mr. Yoshiaki Yoshida served as the representative director of a subsidiary Mr. Osamu Karatsu has a wealth of knowledge and experience as a Mr. Koichi Tsukui has worked in various R&D divisions and in sales for Mr. Douglas Lefever plays a key role in promoting Advantest’s business of Advantest, Executive Vice President of the Corporate Planning Group, semiconductor expert, in addition to management experience at do- many years, including assignments in Germany, and has a wide range development in Silicon Valley and other parts of the United States. He Executive Vice President of the Corporate Relations Group, and Execu- mestic and overseas research and development institutions. The in- of knowledge and experience regarding the businesses and manage- has broad knowledge and experience regarding the businesses and tive Vice President of the Nanotechnology Business Group, before being sights on the industry which he brings to the management of the ment of the Group. Therefore, Advantest believes he is suitable as a di- management of the Group. His perspective enhances the diversity of appointed Representative Director, President and CEO of the company in Advantest group contribute to the sustainable enhancement of corpo- rector of the Advantest Group. the Board of Directors and can be expected to make it more effective. January 2017. Given his wide range of management knowledge and ex- rate value of Advantest and the effectiveness of the Board of Directors. Thus, Advantest believes he is a suitable person as a director to realize perience, Advantest believes that he is a suitable person to realize sus- Thus, Advantest believes that he is a suitable outside director. sustainable enhancement of the corporate value of the Advantest tainable enhancement of corporate value as a director of the company. Group.
Toshimitsu Urabe Nicholas Benes Yuichi Kurita Kouichi Nanba Director, Standing Audit & Supervisory Outside Director, Standing Audit & Super- Outside Director Outside Director Committee Member visory Committee Member
Date of Appointment 2019 Date of Appointment 2019 Date of Appointment 2015 Date of Appointment 2019 Date of birth October 2, 1954 Date of birth April 16, 1956 Date of birth July 28, 1949 Date of birth September 1, 1949 Nationality Japanese Nationality American Nationality Japanese Nationality Japanese Shares Held as of Shares Held as of Shares Held as of Shares Held as of March 2020 142 March 2020 2,000 March 2020 11,482 March 2020 142
11/11 10/10 11/11 14/14 13/13 11/11 10/10 10/10
Mr. Toshimitsu Urabe has extensive management experience at a leading Jap- Mr. Nicholas Benes has extensive knowledge and experience in corpo- Mr. Yuichi Kurita has many years of experience in finance and corporate Mr. Koichi Namba has a wealth of experience in law and compliance anese general trading company, particularly overseas experience in the United rate governance and experience in investment banking, including M&A. planning, and has extensive knowledge and experience in finance and and a high degree of specialized knowledge, after serving as a judge States and Asia, experience in business investment decisions, and extensive The insights on corporate governance and the perspective of share- accounting. In addition, he has served as a director and is an audit and mainly in charge of civil cases for many years, and engaging in the experience in personnel management. The insights which he brings to the holders which he brings to the global management of the Advantest supervisory board member of the Advantest Group, in which position practice of corporate legal affairs as a lawyer. Advantest believes that global management of the Advantest group contribute to the sustainable en- group contribute to the sustainable enhancement of corporate value of he is currently striving to improve auditing/supervision and governance. he is a suitable person as an outside director who is a member of the hancement of corporate value of Advantest and the effectiveness of the Board Advantest and the effectiveness of the Board of Directors. Thus, Ad- In view of his achievements, Advantest believes that he is a suitable Audit and Supervisory Committee of the Company, as his insights into of Directors. Thus, Advantest believes that he is a suitable outside director. vantest believes that he is a suitable outside director. person to enhance supervisory and oversight functions as a director the auditing and supervision of the Advantest Group contribute to the who is a member of the Audit and Supervisory Committee. improvement of auditing and supervisory functions.
Newly Elected Applicable number Soichi Tsukakoshi Atsushi Fujita Sayaka Sumida Experience and skills of directors Committee Outside Director, Standing Audit & Super- visory Committee Member Director, Senior Executive Officer Director, Managing Executive Officer Leadership 3 Board of Directors Date of Appointment 2017 Date of Appointment 2019 Date of Appointment 2020 Date of birth February 1, 1960 Date of birth November 15, 1959 Date of birth January 28, 1961 Audit and Supervisory Nationality Japanese Nationality Japanese Nationality Japanese Finance 3 Shares Held as of Shares Held as of Shares Held as of Committee March 2020 4,935 March 2020 2,263 March 2020 0 Knowledge of the Nomination and 7 semiconductor industry Compensation Committee 14/14 11/11 Attendance Rate(*) Research and 3 development Mr. Soichi Tsukakoshi has worked in sales and marketing, was Senior Mr. Atsushi Fujita has been engaged in corporate administration, mainly Ms. Sayaka Sumida has worked for an accounting firm as a certified Chairperson Vice President of the Sales Group, and currently serves as Executive finance and accounting, for many years, including assignments in the public accountant, has been engaged in accounting, auditing, and in- Global Operation 10 Vice President of the Production Group. He has a wealth of knowledge US and Germany, and he has gained a wealth of knowledge and expe- ternal control operations for many years, and has extensive knowledge and experience concerning sales and marketing as well as production. rience concerning the Advantest Group’s business and corporate man- and experience of finance and accounting. Advantest believes she is a Legal affairs, We have determined that he is a suitable person to realize sustainable agement. Thus, Advantest believes that he is a suitable person to suitable person as an outside director who is a member of the Audit 2 enhancement of corporate value as a director of the Advantest Group realize sustainable enhancement of corporate value as a director of the and Supervisory Committee of the Company, as her insights contribute attorney at law by improving the efficiency of manufacturing and optimizing supply Advantest Group. to the effectiveness of the Board of Directors and the improvement of (*) 2019 chains. the functions of the Audit and Supervisory Committee.
55 ADVANTEST CORPORATION Integrated Annual Report 2020 56 Introduction Our Strategy Our Performance Sustainability Governance Information
Messages from Outside Directors
Advantest from Board of Director’s perspective
Osamu Karatsu Toshimitsu Urabe Nicholas Benes Kouichi Nanba Director Director Director Director Standing Audit & Supervisory Committee
Provision of Appropriate External Resources Two Challenges We Must Overcome to Our Governance and Sustainability The Importance of Compliance & for Initiatives and Expansion in New Achieve Advantest’s Grand Design Management Advantest’s Challenges Business Fields
Advantest’s business is measurement and test technologies With 95% of our sales overseas, we have 32 affiliated com- After one year as a director, I believe our board is a dedicat- Recently, we have been flooded with documents written that guarantee the functional performance of products and panies in 17 countries around the world, and the global mar- ed team that draws upon a diverse mix of skills experience from left to right (rather than from top to bottom in Japa- add value to them. The history of semiconductor products ket for semiconductor test equipment is divided between to effectively monitor and provide fresh perspectives. Man- nese style) and katakana terms (English words transliterated has been one of outstanding growth underpinned by the Advantest and US supplier Teradyne. In response to the glo- agement is comfortable being held accountable, is respon- into Japanese, rather than translated). Among them you highly stable product quality and increased market value that balization of our business, 2 out of 11 directors and 10 out of sive to the independent directors, and is open to new may have seen the word “compliance.” Compliance refers can be obtained from high-performance test technology. 24 executive officers are now of non-Japanese nationality, agenda topics and requests for additional reporting. At the to legal compliance, that is, the compliance of a company In recent decades, in particular, semiconductor technology making our management team multinational compared to board meeting, there is much discussion and healthy de- with rules and social norms. It can be said that the concept has advanced dramatically in accordance with Moore’s law, other Japanese companies. In 2018 we announced our bate about both near and long-term issues, and especially has already taken root in society. It seems as if it should be and semiconductors have made enormous gains in perfor- “Grand Design,” a long-term vision that aims to use ad- about how best to realize the full potential of our “grand de- easy for companies to maintain compliance, but it is sur- mance and complexity. To establish these advanced devices vanced technology to contribute to the development of the sign” strategy as the semiconductor value chain evolves. To prisingly difficult. I was a witness to scandals at three other as marketable products, Advantest has played a crucial sup- world’s semiconductor-related industries and achieve sus- deepen our thinking and understanding of key issues, every companies last year. The causes of these, in my opinion, porting role in the “backbone” of the electronic products in- tainable growth. This was a declaration of our determination year the board also spends several days off-site for “deep were lack of norm awareness in pursuit of profits, insuffi- dustry by launching more and more advanced test systems to continue to diversify our profit sources and add new busi- dive” discussions. This year, as part of this we visited Ad- cient monitoring systems with respect to the division(s) that with continually improving technology. nesses by solidifying our advantage in the semiconductor vantest facilities in California. caused the scandals, and corporate cultures that had poor In recent years, these trends towards higher performance test equipment realm and further expanding our business During the last fiscal year, the board received training awareness of norms in the first place. and greater complexity have transcended the boundaries of domains across the semiconductor value chain. I believe we about recent developments in ESG-based investment from Once a breach of compliance causes negative publicity, semiconductor devices. We now talk about product perfor- face two challenges to achieving this ambitious vision. an expert. In this report, we are for the first time disclosing the damage to the company can be enormous, and it can mance and quality in the context of assemblies and systems. The first is endless organizational evolution. In the future, information following the SASB’s standards for the semi- even develop to the point that the management base of the In anticipation of this development, Advantest announced a as Advantest’s domain of activity expands, the factors that conductor industry. Going forward, we plan to track these company is undermined. In that sense, compliance is ex- new medium- to long-term management policy (Grand De- must be taken into consideration for sustainable growth will and other measures at the board level, so as to remind ex- tremely important for companies. Therefore, there seems to sign) in 2018, and has further advanced its implementation increase. Efficient and well-balanced multi-disciplinary orga- ecutives to take proactive leadership and concrete steps to be no other way to prevent breaches from happening apart since then, while continuing to calibrate the direction of its fu- nizational management approaches such as separate busi- improve them as part of daily management. We will also from making sure that the organization has open channels ture test business development against industry trends. ness strategies for each business, cross-sectional resource/ need to keep a lookout for other significant sustainability of communication rather than being divided into silos, and Starting with the addition of SLT businesses acquired from knowledge management for each function such as manufac- criteria and growth opportunities that are unique to our that the “left hand” always knows what the “right hand” is Astronics and Essai to the Advantest Group, the company turing, sales, and administration, and operations optimized company’s focus on test, and create a virtuous cycle in tan- doing; strengthening monitoring systems; and promoting has been steadily laying the groundwork to expand its busi- for regional characteristics will increasingly be required. There dem with our strategy. This is already being done, but we compliance education for employees. ness foundation by evolving into a total test system company is no “silver bullet” or perfect template, and these are issues must seek to do it more. By the way, as you know, our company has a vast busi- that can organically provide end-to-end test technologies, that we will continue to work on while responding to environ- This year we will be considering ways to streamline our ness reach, covering Europe, the United States, China, Tai- and continues to seek the most effective approach to feed mental changes, but I am looking forward to seeing how our board practices so that we can allocate more time to the wan, and South Korea, and many foreigners are working test data back to improve design and production process organization, which has already formed the ability to adapt to most important issues and long-term policies, while suffer- with us. Advantest is a truly diverse company. The problem management by utilizing big data analytics. such developments, will continue to evolve in response to ing no loss in the quality of monitoring. To the extent feasi- is that for such companies, I feel the biggest challenge is Many other companies have recently reported accidents our long-term vision. ble given local differences, we will also seek to further whether the compliance policy established at the head of- such as malfunctions and fires after shipping due to com- Our second challenge is unique shared values. As our improve and standardize our global practices for matters fice can be spread to employees all over the world. bined compound failures at the final product level. The eco- business and our staff become globalized, it would be ideal if such as compensation, compliance, and reporting. We Small compliance violations may cause big problems. nomic and brand damage resulting from such incidents can we could continue to take pride in our origins, so that em- must evolve our organization as fast as the expanding size When an issue occurs, it is important not to overlook it and be fatal for companies. Advantest is committed to proactively ployees of various nationalities could fully share a sense of of our global footprint. Advantest is a company with im- to hold discussions at the Audit and Supervisory Committee detecting defects concealed by technolocial complications belonging to a global enterprise that was born in Japan. For mense potential, but to achieve it, we must fully benefit from and the board of directors. I hope to do my part to ensure and providing value to minimize market accidents and asso- example, Advantest has a unique set of values backed by efficient global teamwork, and avoid unnecessary risks and that Advantest maintains a flawless compliance record. ciated rework costs, and aims to expand this commitment as many years of experience, and it is possible for us all to share mishaps. In governance, there is always room for improve- part of the company’s support for industrial productivity im- the awareness of being grounded in this history, which can ment. provement. be a unifying counterweight to ongoing innovation and cre- Since initiatives and expansion in these new fields of busi- ation in various fields and regions. It is natural for a company ness involve activities that may require experience and re- to adapt to global frameworks such as the SDGs, but I think sources in addition to those accumulated by Advantest, I that the shared values unique to our company are the ulti- hope to make an active contribution by providing appropriate mate foundation of our Grand Design. I hope that “The Ad- information and advice as an independent director. vantest Way” will evolve in that direction.
57 ADVANTEST CORPORATION Integrated Annual Report 2020 58 Introduction Our Strategy Our Performance Sustainability Governance Information
Thoughts about Corporate Governance (Dialogue between CEO and Outside Director)
by the government. Traditional Japanese companies’ dis- closure stance has focused on meeting statutory disclo- sure requirements, and efforts to determine optimal disclosure content from the perspective of shareholders and investors have not always been sufficient, in my opin- ion. In that regard, I think the Stewardship Code and Cor- porate Governance Code announced in 2014 and 2015, Yoshiaki Sayaka respectively, had a salutary effect on improving corporate disclosure stances. This has led to the expansion of Yoshida Sumida non-financial information disclosure related to ESG and Representative Director, Outside Director, Standing Audit & President and CEO Supervisory Committee Member the SDGs, which is frequently emphasized these days.
(President Yoshida) The government has encouraged Ms. Sayaka Sumida, who was appointed as a companies to aim for ROE 8% and restore Japan’s earn- member of the Audit and Supervisory Commit- ing power. The reason for this is that Japanese companies tee at this year’s Annual General Shareholders have been earning less than their counterparts in Europe, Meeting, spoke with President Yoshida about America and Asia. I think that there was a time when we been focusing on crisis management on the premise that issues related to the governance of listed com- were content to just compare ourselves to our Japanese scandals may and will occur in the future, for example, by panies, drawing on her long experience as a peers without looking at the rest of the world, but now we expanding our internal reporting system to make sure certified public accountant. The moderator was must hold ourselves to global standards of achievement. nothing ever gets swept under the carpet. Akira Ono (Executive Officer & General Manager Regarding governance, I attach great importance to the of Human Resources Department). perspective of outside directors. While discussing exactly What are Advantest’s challenges regarding what we can and cannot do with the rest of the Board of Q diversity, especially in terms of women’s Directors, I’m committed to openly disclosing information. advancement?
What do you think recent corporate scandals (Director Sumida) In the world of accountant, little dis- First, President Yoshida, please tell us about the transparency, and enhanced our internal reporting system Q tell us about the need for compliance tinction is made between men and women. I myself have Q achievements of the Board of Directors and future for compliance. Every board meeting means a minimum of systems? always believed that chances will come my way if I do not challenges facing Advantest with respect to governance. 3 hours and a maximum of 5 hours of open and heated put artificial limits on myself. Due to recent workstyle re- (President Yoshida) In Advantest’s case, 95% of our (President Yoshida) In the three years since I became discussion. Future issues include the planning and execu- forms, increased productivity has made it easier to avoid sales are overseas and so are more than half of our em- president in January 2017, we have formulated a medium- tion of succession plans, the narrowing down of agenda overtime. This has created a work environment that is ployees. The customs and logic of Japan, where we have to long-term management policy, revised “The Advantest items for the Board of Directors for deeper and more thor- friendlier to women, who used to have difficulty balancing our headquarters, may not always operate globally. There Way” to clarify our corporate philosophy and code of con- ough discussions, and education in creating sophisticated work with childbirth and childcare. I think this means that are regional differences due to history, culture, and cus- duct, issued our first annual integrated report, abolished materials for that purpose. In addition, as companies are we no longer have to worry about gender differences. toms that must be handled carefully. However, there are our consultant and advisor system, revised all our internal now evaluated from the perspective of their ESG initiatives certain lines that cannot be crossed, and these must be rules, revised our remuneration system to ensure and contributions to the SDGs, I am also aware of the im- (President Yoshida) Advantest has relatively few fe- enforced clearly and without exception. I believe it is the portance of enhancing disclosure of our non-financial poli- male employees, so there are female department manag- responsibility of top management to convey this to em- cies and progress. ers, but no female executive officers or vice presidents yet. ployees and educate them in the importance of compli- I think this is one of our challenges. To promote the active ance. With regard to information disclosure, Director participation of women, I believe it is important not to give Sumida, what issues are on your mind? special consideration to women, but to give them equal Q (Director Sumida) Looking at the scandals that have opportunities regardless of gender, and promote them ac- occurred at various companies, I think they are a result of (Director Sumida) I have been working at an account- cording to their abilities and motivation, just as we do for people not being able to stand up for principles that ing firm for a long time as a certified public accountant, men. should be obvious to every schoolchild. The spirit of com- and during that time, I have seen the reality of various in- pliance cannot be instilled overnight. I think it is very im- formation disclosures related to the IR activities of many (Director Sumida) I also believe that privileging women portant for top management to repeatedly convey these listed companies. We all believe that open disclosure is an just because they are women is lamentable, in a sense. I “obvious things” to employees over and over again in their indispensable element of corporate governance, but in Ja- think it is important to treat employees equally based on messaging in order to create a solid organizational culture. pan, there is generally a strong sense of “You first—no, their individual abilities and motivations, and it is also im- you first!” and there is a limit to the voluntary improve- portant for top management to clearly communicate that (President Yoshida) Just one scandal can cause a ments that will be enacted by individual companies, I’ve message. catastrophic loss of trust in a company. Of course, educa- always been aware of the need for institutional reforms led tion to prevent scandals is important, but we have also
59 ADVANTEST CORPORATION Integrated Annual Report 2020 60 Introduction Our Strategy Our Performance Sustainability Governance Information
Corporate Governance
Our Basic Approach to Corporate Governance Governance Highlights
Advantest’s corporate mission is “enabling leading-edge and to enhance corporate value over the medium to long Inside / Outside Director Ratio Total Tenure (As of 25 June, 2020) Directors who are not technologies.” The Advantest Group constantly strives to term. To that end, the Group has established a fair, effi- Directors Managing Managing E ecutive E ecutive fficers fficers outside directors improve so that we can offer products and services that cient, and highly transparent governance system. Please e y appointed 3 ersons satisfy customers around the world, and contribute to so- note that our Corporate Governance Basic Policy is avail- 5 5 ciety through the development of advanced technologies. able on our website at the following link: In accordance with this mission, and in response to our years 5 ersons Directors who are mandate from stakeholders, Advantest aims to achieve a not Managing https://www.advantest.com/investors/management- E ecutive fficers policy/corporate-governance sustainable level of business development for the Group inside directors years 3 ersons 10 Corporate Governance Scheme
Gender Ratio Japanese / Non-Japanese Director Ratio on apanese lection ismissal lection ismissal lection ismissal Auditing, upervision 18 Accounting Directors who are not audit and Directors who are audit and Auditors supervisory committee members supervisory committee members Male emale apanese Appointment, Proposal Consultation ismissal upport omination and upervision 1 Compensation Committee 82 Audit and Supervisory President and Chief Committee Office Executive Officer nternal Control ＜Makes decisions on Auditing business operations＞ Committee Chairpersons Compliance Committee Managing Executive Cooperation Cooperation Officers Committee Disclosure Yoshiaki Yoshida Yuichi Kurita Toshimitsu Urabe Instruction Committee Board of Directors Audit & Supervisory Committee Nomination and Compensation Committee irectives Sustainable Management (CEO, Inside director) (Non-Managing Executive Officer, (Non-Managing Executive Officer, Promotion Working Group Inside director) Outside director) Executive Officers Risk Management Group
List of Governance Systems (As of June 25, 2020) Departments and Internal Group Companies auditing Auditing conducting business Group Structure Company with an Audit and Supervisory Committee activities 11 Persons · Directors & Managing Executive Officers (Inside) 5 Persons Number of Director · Directors who are not Managing Executive Officers (Inside) 1 Person · Directors who are not Managing Executive Officers (Outside) 5 Persons Corporate Governance Initiatives Jan 2017 A majority of the members of the Term of Office for Directors 1 year (2 years for directors who are members of the Audit and Supervisory Committee) Nomination and Compensation Committee became outside directors Incentive for Directors Performance-based Remuneration System (Executive directors only) Jun 2003 Feb 2006 Jun 2017 Jul 2020 Disclosure of Compensation for individual Directors Only Directors who received Compensation of 100 Million yen or More Introduction of executive 1st meeting of the Nomination First appointment of an outside director Abolition of advisor Committee (voluntary basis) Nomination and Compensation Committee officer system and Compensation Committee as the chair of the Nomination and system Compensation Committee Number of Audit and Supervisory Committee member 3 Persons Number of Outside Director among above 2 Persons Jun 2006 Jun 2011 Jun 2015 Jun 2018 Abolition of retirement allowance system Appointment of first foreign Transitioned to the First appointment of a female Number of Independent Directors 5 Persons Appointment of first outside directors directors “company with audit director Accounting Auditor Ernst & Young ShinNihon LLC and supervisory Established stock compensation committee” format system and reviewed stock option Executive Officer System In Place compensation system
61 ADVANTEST CORPORATION Integrated Annual Report 2020 62 Introduction Our Strategy Our Performance Sustainability Governance Information
Board of Directors / Board Effectiveness
Role of the Board of Directors Activities of the Board of Directors Results of Board Meeting Effectiveness Status of Actions Required Survey The Board of Directors of Advantest, as the company’s Advantest distributes a survey in the form of a question- Advantest is currently working on the formula- Main Actions Taken by the Board of Directors highest management decision-making body, determines naire to all directors every March through April to evaluate tion of a succession plan for the representative in 2019 important matters such as the management policy and the effectiveness of the board of directors. The main items director. In the future, the Nomination and management strategy of the entire group, and also moni- Revision of The Advantest Way to be evaluated are as follows: Compensation Committee will deliberate on it tors and supervises the execution of business by those re- Advantest recently revised The Advantest Way and the board of directors will take the initia- to clarify our management mission, vision, core tive in implementing it. sponsible. By including multiple outside directors as Structure of the board of directors values, action guidelines and action standards, Regarding re-evaluation of risks affecting Ad- members of the Board of Directors, we have strengthened Number of members, diversity of members, taking into account the opinions of outside di- vantest’s business, the executive side analyzed the oversight and supervisory functions of the Board of Di- status of outside directors with respect to oth- rectors and overseas executive officers offered these risks and their discussion was published rectors. At meetings of the Board of Directors, directors er concurrent positions, etc. at meetings of the Board of Directors. Outside in our securities report, including the specific with a wide range of knowledge and experience express directors also advised the Board that employ- Management of the board of directors risks. their opinions from various perspectives and hold lively ees around the world need to be more aware Timing of distribution of materials, content of Executive officers who had not attended gov- discussions of the agendas proposed by management. of The Advantest Way, so we are holding work- materials, prior disclosure of agenda, number ernance training attended training related to These meetings review the company’s mid- to long-term shops around the world to raise awareness. of agenda items, frequency of board meetings, governance, and in addition, lectures by ESG management policy, executive appointment and compen- See pages 41-42 chairman’s effectiveness, quality of online and corporate value enhancement experts sation, budget and performance settlement of accounts, meetings/simultaneous interpretation, etc. were held for Japanese directors and execu- Review of Important Rules M&A proposals, etc. and are held about once every tive officers. month, lasting about 3 to 5 hours. The current board of di- We have reviewed important rules such as the Agenda of the board of directors rectors is composed of five inside executive directors, one Regulations of the Board of Directors. The pro- Management strategy, delegation to execu- cess of sending information to outside direc- inside non-executive directors, and five outside non-exec- tives, succession plan, compensation system, tors in advance and confirming their opinions The FY2019 effectiveness evaluation of the board of direc- utive directors, for a total of 11 members (this includes all risk, conflict of interest, appointment/dismissal has enabled us to enact more appropriate reg- tors was also discussed at the board of directors meeting directors who are also Audit and Supervisory Committee of directors, compliance, etc. ulations. in May 2020. At that time, it was confirmed that the com- members). Two of the directors are non-Japanese and Board of directors support system position of the board of directors was appropriate and that one is a woman. In order to maintain seamless communi- Enhancement of Internal Reporting System Reports from the Nomination and Compensa- the board of directors exchanged opinions freely. On the cation among directors, we have arranged for simultane- Since outside directors suggested that our in- tion Committee, provision of information to other hand, the following points were raised for future im- ous interpretation at meetings of the Board of Directors so ternal reporting system be expanded, we have outside directors, training for directors, use of provement: that we can speak freely in both Japanese and English. set up an outside desk to accept anonymous experts, etc. Materials and minutes are also translated into English. We reports on incidents and to enable reports from Materials distributed by the Board of Directors outside the company. See page 49 endeavor to provide the materials to directors no less than and explanation method three business days before meetings in principle. Details of Advantest’s COVID-19 Response Result in FY2018 Method of reporting from the Nomination and the members of the Board of Directors are as described The results of the fiscal 2018 survey showed that it was The Board of Directors heard reports about the Compensation Committee on page 55 to 56. The Chairman of the Board of Directors COVID-19 pandemic and its impact on Advant- necessary to formulate a succession plan for represen- How outside directors can best utilize out- is Yoshiaki Yoshida, Representative Director, President and est’s business, and discussed it. tative directors, reanalyze risks affecting Advantest’s side experts CEO of the Advantest Group. business, and consider the training provided for direc- tors. The status of each of these items is as follows:
63 ADVANTEST CORPORATION Integrated Annual Report 2020 64 Introduction Our Strategy Our Performance Sustainability Governance Information
Audit System / Nomination and Compensation Committee / Others
Audit System prescribed audits. The certified public accountants who ex- aforementioned the policy and procedures, the “Indepen- Compliance Committee ecuted Advantest’s accounting audit work in FY2019 are dence Criteria for Outside Directors” established by the Mr. Makoto Usui, Mr. Akiyuki Matsumoto, and Mr. Keiichi Board of Directors shall also apply. Candidates recom- Advantest transitioned to the status of a company with an Wakimoto. All of them have continuously performed Ad- mended to the Board of Directors have a wealth of knowl- The Compliance Committee promotes compliance activi- Audit and Supervisory Committee on June 2 4, 2 0 1 5. In vantest’s audits for up to seven years. In addition, assis- edge and be expected to contribute positively to the ties, including education for employees provides educa- accordance with our audit policy and audit plan and divi- tants performing Advantest’s accounting audit work consist Board of Directors. tion on human rights issues, and handles consultations sion of duties, Audit and Supervisory Committee members mainly of certified public accountants and include those and complaints. The Compliance Committee consists of attend important meetings such as the Board of Directors, with specialized knowledge, such as system experts. Appointment and Selection Criteria for Outside nine members, one of whom is an outside lawyer. Managing Executive Officers Committee, Internal Control Directors Committee, Compliance Committee, and Disclosure The Committee comprehensively considers the personali- Committee, hear reports on the execution of duties from Nomination and Compensation Committee ty, concurrent status as a director of other companies, the Disclosure Committee the directors and executive officers responsible, inspect number of years as an outside director of the Company, important decision documents, investigate the status of etc., to select candidates from among those who meet the operations and assets of the head office and major sub- Advantest has established the Nomination and Compen- independence criteria established by Advantest and have The Disclosure Committee oversees proper disclosure by sidiaries in Japan and overseas, and also audit the perfor- sation Committee as a non-mandatory organization, which any of the following qualifications: the company. The Disclosure Committee consists of 26 mance of executive officers, and other business execution complements the Board of Directors, to decide on the ap- members, including Unit Leaders. pointment, selection, and dismissal of Directors and Exec- organizations in cooperation with the Audit Office and oth- Person with legal expertise, such as a lawyer er internal control departments. The Audit and Supervisory utive Officers, and to determine their compensation. The Person who has experience in corporate man- Committee consists of one internal director and two ex- Nomination and Compensation Committee is responsible agement Sustainable Management Promotion ternal directors. The Audit and Supervisory Committee im- for the functions of both the Nomination Committee and Person who has considerable knowledge of fi- Working Group plements its audit and supervisory functions by attending the Compensation Committee. The Nomination and nance and accounting Compensation Committee is responsible for improving the important meetings, collecting information by listening to Person who has knowledge and experience in The Sustainable Management Promotion Working Group fairness, rationality and transparency of the appointment, industries related to Advantest’s business such business reports from the executive departments, and helps each business division incorporate policies related to selection, and dismissal of Directors and Executive Offi- as semiconductor-related industries strengthening cooperation with our accounting auditor and ESG/the SDGs into the strategies it formulates on the ba- cers and of their compensation. Person who has extensive experience in re- the internal audit department. One full-time member has sis of policies and priority measures enacted by high- The Nomination and Compensation Committee is com- search and development been named to the Audit and Supervisory Committee to er-ranking organizations such as the Managing Executive posed of members selected from among the directors by Others who have background or ability equiva- improve the quality of its work. Mr. Yuichi Kurita, inside di- Officers Committee, and supports the business divisions resolution of the Board of Directors. To incorporate an in- lent to the above items rector and Audit and Supervisory Committee Member, has in carrying out activities in line with the PDCA cycle. It con- dependent perspective, the majority of the members are many years of experience as an officer in charge of corpo- sists of 40 members, chiefly the leaders of all business di- outside directors. The Human Resources Department rate planning, finance and management of the Company. visions, including four executive directors. Another member of the Audit and Supervisory Committee, serves as the secretariat of the Nomination and Compen- Ms. Sayaka Sumida, is an outside director who works as a sation Committee. Managing Executive Officers Committee certified public accountant at an audit corporation. Both Main Discussion Agenda of the Nomination and Risk Management Committee have experience and sufficient financial and accounting The Managing Executive Officers Committee is made up Compensation Committee in 2019 knowledge. In addition, Mr. Koichi Nanba, an outside di- of executive officers and higher, and deliberates on a cer- rector and Audit and Supervisory Committee Member, has tain number of important matters as decided by executive The Risk Management Committee is responsible for for- Discussion of director and executive officer extensive knowledge of legal affairs. Mr. Kurita chairs the organizations. Since Advantest has a number of non-Japa- mulating measures to respond to the possibility of events candidates Audit and Supervisory Committee. Outside directors who nese managing executive officers, discussions incorporate such as disasters and other incidents that would make it Fixed remuneration, performance-linked bo- are Audit and Supervisory Committee members attend each country’s perspective and reflect various opinions. difficult to continue business, and any possibility of harm nuses, stock compensation levels, and future meetings of the Internal Control Committee and participate to our employees, as well as the possibility of scandals plans Meetings are held about twice a month, mainly in the form in on-site audits of business execution departments con- The advisor system of web conferences. that lead to social problems. The Committee consists of ducted by the full-time Audit and Supervisory Committee Discussion of appointment contracts for direc- 18 members, including executive officers, general manag- member as necessary to actively audit and supervise the tors and executive officers ers, deputy general managers, business managers, and status of business execution of the company. In addition, Internal Control Committee functional members, and is chaired by the president. the Audit and Supervisory Committee collaborates with In FY2019, the Committee confirmed the safety of em- our accounting auditor, the Audit Office and other internal The current members of the Committee are Toshimitsu ployees during and after Typhoon Hagibis and executed control departments, and the Audit & Supervisory Board Urabe, Koichi Nanba and Yoshiaki Yoshida. Toshimitsu The Internal Control Committee identifies important risks Advantest’s overall COVID-19 response. Members of Advantest Group companies, ensuring op- Urabe is the chairman. for the entire Group and analyzes them. At the same time, portunities for exchanging opinions and communication. Regarding directors and executive officers, the Nomina- it has clarified which departments are responsible for each With regard to internal audits, we have established an tion and Remuneration Committee shall comply with the risk, and policies and procedures for dealing with them. Audit Office, and multiple dedicated employees routinely policy and procedures for appointment, selection, and dis- The Internal Control Committee consists of 23 members, monitor the maintenance and operation status of the com- missal of directors and executive officers established by including Unit Leaders and administration department pany’s internal controls, as well as identifying problems, the Board of Directors, and shall recommend persons as personnel. One member is an outside lawyer who acts as pointing out issues, and making recommendations for im- candidates to the Board of Directors who will contribute to advisor. In addition, outside directors can participate as provement. a sustainable level of business development and enhance- observers. Regarding accounting audits, Advantest has an audit ment of corporate value over the mid-to-long term. In contract with Ernst & Young ShinNihon LLC and receives addition, regarding outside directors, in addition to the
65 ADVANTEST CORPORATION Integrated Annual Report 2020 66 Introduction Our Strategy Our Performance Sustainability Governance Information
Compensation and the General Meeting of Shareholders
Design of Compensation to increase independence of outside directors, only fixed compen- Upper Limits on Director Compensation Corporate Values sation shall be paid them. (1) Regarding fixed compensation, the Committee shall Fixed compensation Performance-linked stock Stock options Compensation Policy and Process refer to external objective data and set it at an appropri- compensation ate level according to the duties and responsibilities that Compensation for directors and executive officers is de- Directors who are not Audit and No more than JPY200 No more than JPY200 scribed in “Policies and procedures for determining Com- executives carry out. Supervisory Committee members million per year*2 million per year*2 (excluding outside directors) pensation for directors and executive officers,” as follows. (2) Positioning performance-based bonuses as a short- No more than JPY600 term incentive, the Committee calculates them based million per year*1 Compensation consists of fixed compensation, bonuses, Outside directors who are not and stock compensation linked to business performance, on performance indicators such as sales, operating Audit and Supervisory in proportions deliberated on by the Nomination and Com- margin, net income, and ROE of the Group. Committee members (3) Stock compensation is positioned as a long-term in- N/A pensation Committee and decided by the Board of Direc- Directors who are Audit and No more than JPY100 tors. Directors who are Audit and Supervisory Committee centive and a way of sharing value with shareholder. Supervisory Committee million per year*1 members and outside directors receive only fixed com- Stock options and performance-linked stock compen- members sation are granted on the basis of comprehensive con- pensation. *1 By resolution of the 73rd Ordinary General Meeting of Shareholders held on June 24, 2015 sideration of performance trends, business environment, *2 By resolution of the 76th Ordinary General Meeting of Shareholders held on June 27, 2018 Policies and Procedures for Determining stock price levels, etc. With regard to perfor- Compensation for Directors and Executive Officers mance-based stock compensation, the number of shares received will fluctuate based on performance in- 1. Purpose Directors Who Received Compensation of 100 Million yen or More and the Amount of Regarding the compensation of directors and executive dicators such as sales, operating margin, net income, (FY2019) officers, this policy has been devised so as to contribute and ROE of the Group for three consecutive fiscal years. Compensation Thereof to the sustainable development of the Group, improve- 3. Compensation Decision Procedure Total Amount of Compensation by Type Total Amount of Compensation for directors (excluding directors who are Type of Officer Performance- ment of corporate value over the medium to long term, Name Compensation Company Category Fixed- Performance- (As of March 31, 2020) Stock Options based Stock Audit and Supervisory Committee members) and exec- (million JPY) Compensation linked Bonus contribution to shareholder profits, hiring and retention Renumeration of excellent management resources, and optimization of utive officers shall be discussed by the Nomination and Representative Yoshiaki Compensation Committee based on consultation with 149 Director, President Advantest Corporation 60 51 20 18 motivation. Yoshida and CEO 2. Compensation Structure and Decision Policy the Board of Directors and will be proposed to the Soichi Director, Managing Compensation for directors (excluding directors who are Board of Directors. The Board of Directors shall discuss 101 Advantest Corporation 41 37 11 12 Tsukakoshi Executive Officer Audit and Supervisory Committee members) and exec- proposals from the Nomination and Compensation utive officers is structured to best achieve the purpose Committee and determine compensation. The remuner- Director, Managing Advantest Corporation 10 - 11 12 ation of directors who are Audit and Supervisory Com- Executive Officer defined in 1. above, consisting of 1) fixed compensa- Hans-Juergen 138 tion, 2) performance-based bonuses, and 3) stock com- mittee members will be determined through consultation Wagner Advantest Europe with directors who are Audit and Supervisory Commit- Managing Director 57 48 - - pensation. The amount and ratio of these shall be set GmbH appropriately. In consideration of the role and tee members.
General Meeting of Shareholders as a Composition of Compensation for Directors (FY 2019) Venue for Dialogue with Shareholders i ed om ensation Performance lin ed onus Stoc O tions Performance based Stoc emuneration We regard the General Meeting of Shareholders as an op- nside umber o portunity for dialogue with our shareholders. In 2020, we ersons ligible otal prioritized COVID-19 safety precautions to ensure the irectors o are million yen million yen million yen million yen safety of our shareholders and their families, holding the not audit and su ervisory persons million yen event at a larger venue than usual so that shareholders committee members could feel at ease. In addition, for shareholders who could otal not attend in person, for the first time we posted video of irectors o are persons million yen the business reports delivered at the meeting on our web- audit and su ervisory site, enabling shareholders to access them on demand. committee members Going forward, we will continue to take into consideration Outside otal the fact that some shareholders may find it difficult to -at tend in person, and enable a greater number of sharehold- Inde endent persons million yen irectors ers to participate, by providing more open access to * There were five Outside Directors as of March 31, 2020, but the above compensation amounts and numbers include one inside director and two outside directors who stepped down general meetings of shareholders. on June 26, 2019.
67 ADVANTEST CORPORATION Integrated Annual Report 2020 68