Our Stance to Corporate Governance
Advantest formulated the Corporate Governance Policy based on the principles of its Corporate Governance Code.
Corporate governance at Advantest lives by the "Enabling the Leading Edge Technology" corporate philosophy. We have established The ADVANTEST Way & Code of Conduct while contributing to the growth of society through leading-edge technological development by encouraging ongoing self-improvement to provide technology, products and services that are able to satisfy customers. By instilling and adhering to this management philosophy as the foundation of activities for all executives and employees throughout the Group, we will enhance the transparency and fairness of management, make decisions quickly, accelerate the speed of management, and establish a framework for strengthening the competitiveness of the company to improve sustainable corporate value, which we will build and operate as a corporate system.
While encouraging appropriate risk taking in the execution of management, our objective is to improve corporate value by building corporate governance which establishes and operates highly effective auditing functions for the execution of management based on this concept.
The websites below publish information defined in our basic policies on corporate governance.
The global business environment is changing more rapidly than ever before. To continuously increase our corporate value and competitiveness in today's world, we emphasize swift decision-making and execution. We also place an emphasis on sound, highly transparent business operations in compliance with relevant laws and regulations. In order to meet these challenges, we draw clear lines of authority within our organization and set responsibilities in accordance with each management function, assigning each role to the best person for the job.
We have been implementing Company with an Audit & Supervisory Committee system since June 2015. Advantest further strengthened its corporate governance and Board of Directors' audit function under the company with an audit & supervisory committee which the audit and supervisory committee member uses their voting rights in Board of Director Meetings, and with the aim of further increasing our corporate value. Furthermore we have established a structure that can quickly respond to the rapidly changing business environment, and in order to strengthen our corporate governance, starting from 2003 we introduced an executive officer system.
Corporate governance structure
|List of Governance Systems (As of June 27, 2018)|
|Structure||Company with an Audit & Supervisory Committee|
|Executive Officer System||In place|
|Number of Directors||9|
|Number of Outside Directors||4|
|Number of Non-Japanese Directors||2|
|Term of Office for Directors Who Are Not Audit & Supervisory Committee Members||1 year|
|Number of Directors Who Are Audit & Supervisory Committee Members||3|
|Number of Outside Directors||2|
|Term of Office for Directors Who Are Audit & Supervisory Committee Members||2 years|
|Nomination and Compensation Committee||In place|
|Nomination and Compensation Committee Members||3 (Directors) |
(Two of which are outside Directors)
|Nomination and Compensation Committee Chair||Outside Director|
|Number of Board of Directors Meetings Held in FY2017||13|
|Performance-based Remuneration System||In place|
|Executive Officer System||In place|
|Non-Japanese Executive Officers||11|
Please see the information below for the Corporate Governance Report
Board of Directors
The Board of Directors, as a management decision-making body, makes decisions on the basic policy for the management of the entire group, as well as decisions on important matters such as management strategy, and, in order to ensure quick and efficient business operations, monitors and supervises whether executive committees that have had authority delegated to them are operating appropriately. Currently, our Board of Directors is made up of nine Directors, four outside Directors and five internal Directors, and two of which are non-Japanese Directors. The Board of Directors meets once a month as a general rule for approximately three hours. The materials for the meetings are handed out to each Director in advance so that everyone will be well informed of the information for the meeting in advance. In order to ensure the will of our diverse Board of Directors is communicated clearly, we bring in a simultaneous interpreter to Board of Directors meetings so that every Director can speak freely in both Japanese and English. We also prepare the meeting minutes in English.
We expect our four outside Directors to make decision and conduct audits from an independent standpoint to leverage the expertise of each Director in our management. In addition, Advantest has built a system to ensure sound management by requiring reports from the board of Directors to the Managing Executive Officers Committee on the matters approved for business execution as well as strengthening of informational sharing and auditing functions.
The attendance of all outside Directors to the Board of Directors meetings exceeded 90% in FY2017.
The medium-term plan was debated at Board of Directors meetings in fiscal 2017.
The Board of Directors also conducts surveys every year that include a self-assessment of each Director, analyze and evaluate the effectiveness of the Board of Directors itself, and identify challenges related to the structure, proposals and operation of the Board of Directors to make improvements as necessary.
Information regarding the background of directors, the reasons for their selection, etc., is given in the director appointment proposals section of the Notification of Convening of Regular Meetings of the Board of Directors and in the company's business report.
Assembly of Outside Directors
Outside Directors come together in a separate meeting roughly once or twice each quarter to discuss the environment surrounding the company and the internal state of business to promote understanding of the matters approved by the Board of Directors and to engage in a lively debate.
The outside Directors held separate meetings four times in fiscal 2017. The attendance to these four meetings by the outside Directors was 100%.
Advantest plans and holds training for Directors once or twice every year to provide opportunities to learn the information and expertise required to deepen understanding of the role and responsibilities of Directors.
Nomination and Compensation Committee
In 2005, Advantest established a Nomination and Compensation Committee as a discretionary institution. Nomination and Compensation Committee members consist from three Directors including two outside Directors selected by the Board of Directors' resolution, and outside Director is in charge of Nomination and Compensation Committee chairperson. The Nomination and Compensation Committee, in consultation with the Board of Directors, discusses matters relating to nomination and compensation of Directors, and makes proposals to the Board of Directors.
* The number of people given is correct as of June 27, 2018
We have established a policy and procedure to assure objectivity and transparency of nomination and compensation of Directors and are made publicly available on the website.
Executive Officer System
Advantest has introduced an Executive Officer system that keeps decision-making functions separate from executive functions, in order to boost management efficiency.
Executive Officers are selected by the Board of Directors as senior management dedicated to the execution of operations. They have the responsibility for swiftly and efficiently implementing management policies and strategies determined by the Board of Directors. The term of each Executive Officer is limited to one year, so as to achieve more explicit accountability.
There are a total of 24 Executive Officers*, 11 of whom are not citizens of Japan (America: 3; Europe: 3; Asia: 5; Percent of non-Japanese: 46%), appointed to enhance integration of the company's global operations.
* The number of people given is correct as of June 27, 2018
With regard to decisions relating to the compensation of members of the Board of Directors (excluding directors who are members of the Audit & Supervisory Committee) and executive officers, following consultation with the Board, the Nomination and Compensation Committee implements review, and then submits a proposal to the Board. The Board then reviews the proposal submitted by the Committee, and makes a final decision regarding compensation. The compensation of directors who are members of the Audit & Supervisory Committee is determined following consultation with those directors who are members of the Audit & Supervisory Committee.
Executive compensation for fiscal 2017 is as follows.
|Classification||Number of persons receiving compensation||Compensation amount|
|Directors (excluding directors who are members of the Audit & Supervisory Committee)||8||291 million yen|
|Directors who are members of the Audit & Supervisory Committee||3||67 million yen|
|Total||11||358 million yen|
- The amount of compensation includes the payment for stock options.
- Of the above-mentioned compensation, for the two outside Directors (excluding Directors serving on the Audit and Supervisory Committee), and two outside Directors (serving on the Audit and Supervisory Committee), the amount of compensation was 41 million yen.
Advantest has set up and maintains internal control systems that correspond to the requirements of the Companies Act and the Financial Instruments and Exchange Act. In order to manage the group with an emphasis on performance evaluation based on the consolidated balance sheet, these systems are built as a unified system that includes both Advantest and its affiliates.
Also, Advantest has established an Internal Control Committee with related Directors as members, and we operate the internal control systems in a unified manner on the basis of the policies set by the Committee.
Audit & Supervisory Committee
In accordance with the auditing policy formulated by the Audit & Supervisory Committee, the Committee members attend meetings of the Board of Directors and other important meetings; undertake surveys of the state of business operations and of the company's assets, and audit the carrying out of their duties by directors, executive officers and other executive organs within the company. The Audit & Supervisory Committee has three members (including one standing member): one inside director, and two outside directors.* Those directors who serve as members of the Committee are appointed by the Shareholders Meeting separately from other directors who are not members of the Committee.
To facilitate the implementation of appropriate, effective auditing, the Audit & Supervisory Committee may request information from the Auditing Group and from the external auditors, and there are opportunities for the exchange of views with the Auditing Group and the external auditors.
* The number of people given is correct as of June 28, 2018
Accounting Auditors perform accounting audits of the consolidated financial statements, accounting documents etc., and produce an audit report. Advantest has appointed an auditing firm as independent auditor, and receives a set audit.
Advantest has established an internal auditing team that comprises the Auditing Group and the Singapore auditing team. To verify whether the company's day-to-day operations are carried out appropriately and efficiently in accordance with the requirements of relevant domestic and overseas laws and ordinances, and whether operations are performed efficiently, the internal auditing team implements operational auditing, compliance auditing and internal controls auditing. Besides evaluating the efficacy of the internal controls system, when necessary the internal auditing team also provides support to assist in the making of improvements at individual business locations. The internal auditing team hold appropriate qualifications (such as Certified Public Accountant, Certified Internal Auditor, or Qualified Internal Auditor), and all team members are committed to enhancing auditing quality.