Corporate Governance Corporate Governance

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Our Stance on Corporate Governance

Advantest’s corporate mission is “Enabling Leading-Edge Technologies”. Advantest constantly encourages self-study and carries out cutting-edge technological development to provide technologies, products and services that will satisfy customers around the world.

In accordance with the corporate mission of the preceding paragraph, and in response to the mandate from stakeholders, Advantest aims to achieve a sustainable level of business development of the Advantest Group and to enhance corporate value over the mid-to-long term. To that end, Advantest will establish a fair and efficient and transparent governance system. Above is a basic view on Advantest’s corporate governance.

Management Structure

The global business environment is changing more rapidly than ever before, due to factors such as technological advancement and the expansion of protectionist trade policies. 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 become a company with an Audit and Supervisory Committee since June 2015. Advantest further strengthened its corporate governance and Board of Directors' audit function as a company with an Audit and Supervisory Committee, where the committee members use their voting rights in Board of Directors Meetings 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, we introduced an Executive Officer system in 2003.

Corporate governance structure
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List of Governance Systems (As of June 26, 2019)  
Structure Company with an Audit and Supervisory Committee
Executive Officer System In place
Number of Directors 10
 Number of Outside Directors 5
 Number of Non-Japanese Directors 2
Term of Office for Directors who are Not Audit and Supervisory Committee members 1 year
Number of Directors who are Audit and Supervisory Committee members 3
 Number of Outside Directors 2
Term of Office for Directors who are Audit and 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 FY2018 14
Performance-based Remuneration System In place
Executive Officer System In place
Executive Officers 24
 Non-Japanese Executive Officers 10

Please see the information below for the Corporate Governance Report.

Board of Directors

The Board of Directors of Advantest, as a management decision-making body, shall make decisions on significant matters with respect to the management policies and management strategies for Advantest group, and in its capacity to supervise management, the Board of Directors shall monitor and supervise the status of exercise of duties by Executive Officers. Advantest strengthens the oversight and supervision functions of the Board of Directors so as to appoint multiple outside directors as members of the Board of Directors.. Currently, our Board of Directors is made up of 10 Directors (five outside Directors and five internal Directors), two of which are non-Japanese Directors and one is a female Director. The Board of Directors meets once a month as a general rule for approximately three to four 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 that 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 materials and meeting minutes in English.

We expect our five outside Directors to make decisions and conduct audits from an independent standpoint to leverage the expertise and experience of each Director in our management. In addition, Advantest has built a system to ensure sound management by requiring business managers who are not Directors as well as executive Directors to report to the Board of Directors the status of business execution as well as strengthening the sharing of information and auditing functions.

The attendance of all outside Directors to the Board of Directors meetings exceeded 90% in FY2018.

The main agenda items to be resolved or reported by the Board of Directors were decisions on matters to be discussed at the basic management policy, the Executive Officer personnel, agenda submitted to the General Meeting of Shareholders, budget / financial settlement, and acquisition or sales of businesses etc. At a Board of Directors’ meeting, all directors answered a questionnaire to evaluate the effectiveness of their roles and obligations. Advantest analyzed our organization, operation and discussion status by collecting opinions.

(Result of FY2017 and action in FY2018)

It was pointed out that there is room for further improvement in improving the effectiveness of the successor plan such as for the representative director, and the election and dismissal process of the management team and training for the Directors. Based on the item pointed out above, the Board of Directors discusses the succession plan and dismissal process and Advantest describes the result in the “Advantest Corporate Governance Policy” and the “Corporate Governance report”.  Advantest will provide corporate governance training to the members of Board of Directors and Executive Officers (including foreigners).  Advantest will provide other training as necessary. The points where improvement is needed will be addressed in future.  In addition, there were indications about improving the diversity of the members of the Board of Directors. One new female director was appointed at the annual General Meeting of Shareholders of June 27, 2018.

(Result of FY2018)

Followings are the main items that were pointed out. Advantest will consider taking action on these items.

  • Succession plan of Representative Director
  • Reanalysis of risks that influence our business
  • Investigation of director training menu

Assembly of Outside Directors

For outside Directors, we held an inspection tour to research centers and factories, as well as business briefings by managers of business locations, in order to promote understanding of the matters approved by the Board of Directors and to stimulate lively debates in FY2018. All four outside Directors (at that time) attended the tour and briefings.

Director Training

In order to provide opportunities to learn the information and expertise required to deepen the understanding of the role and responsibilities of Directors, we have conducted training on corporate governance for Directors and Executive Officers (including non-Japanese Directors and Executive Officers).
In addition, in FY 2018, all nine Directors (at that time) visited a development site in Germany, so that they can confirm the current development situation and efforts for the future.

Nomination and Compensation Committee

In 2005, Advantest established a Nomination and Compensation Committee as a discretionary institution. The Nomination and Compensation Committee consists of three Directors (including two outside Directors selected by the Board of Directors' resolution), with an outside Director serving as the chairperson of the committee. The Nomination and Compensation Committee, in consultation with the Board of Directors, discusses matters relating to the nomination and compensation of Directors and Executive Officers, and makes proposals to the Board of Directors. The Committee was held 14 times during FY 2018, and a review of the Directors and Executive Officers Nomination/Dismissal Policy and Procedures and the Directors and Executive Officers Compensation Policy and Procedures and discussions on the revision of the Directors' compensation system based on the review were conducted and suggested to the Board of Directors.

∗ The number of people given is correct as of June 26, 2019.

We have established a policy and procedures to assure the objectivity and transparency of the nomination and compensation of Directors, which are 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*, 10 of whom are not citizens of Japan (America: 3; Europe: 3; Asia: 4; Percent of non-Japanese: 41%) and appointed to enhance the integration of the company's global operations.

∗ The number of people given is correct as of June 26, 2019.

Executive Compensation

In response to consultation from the Board of Directors, the Nomination and Compensation Committee deliberates and proposes the Compensation for Directors (excluding Directors who are Audit and Supervisory Committee members) and Executive Officers to the Board of Directors. The Board of Directors deliberates and determines the compensation based on the proposal from the Nomination and Compensation Committee. The Audit and Supervisory Committee deliberates and determines the compensation for Directors who are Audit and Supervisory Committee members.

Executive compensation for FY 2018 is as follows.

Classification Number of persons receiving compensation Compensation amount
Directors (Excluding Directors who are Audit and Supervisory Committee members) 6 371 million yen
Directors who are Audit and Supervisory Committee members 4 65 million yen
Total 10 436 million yen
  1. The amounts of remuneration set forth above include compensation in the form of stock options.
  2. The amounts of remuneration set forth above includes the aggregate amount of remuneration for 2 outside Directors (excluding Audit and Supervisory Committee members), 3 outside Directors (Audit and Supervisory Committee members) in the amount of ¥42 million.

Internal Controls

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.
Advantest has also established an Internal Control Committee with related Directors, including the presidents of overseas affiliates, as members, and we operate the internal control systems in a unified manner based on the policies set by the Committee. From FY 2018, outside Directors have also started to attend the Internal Control Committee to supervise management.

Auditing System

Audit and Supervisory Committee

The Audit and Supervisory Committee investigates the status of business and property, based on the audit policy and audit plan formulated by the Audit and Supervisory Committee. In addition, the Audit and Supervisory Committee will audit the execution of duties by Directors, Executive Officers and other business executing agencies through collaboration with internal control teams and Accounting Auditors. Advantest’s Audit and Supervisory Committee composed of one inside director* and two outside directors*. Audit and Supervisory Committee has appointed one person as a standing Audit and Supervisory Committee member.  Those Directors who are Audit and Supervisory Committee members are appointed by the General Meeting of Shareholders separately from other Directors who are not Audit and Supervisory Committee members. The Audit and Supervisory Committee, the Auditing Group and other internal control departments, the Accounting Auditors, and the corporate auditors of each Advantest group collaborate with one another so as to carry out regular discussions or timely meetings.

∗ The number of people given is correct as of June 26, 2019.

Accounting Auditors

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 Accounting Auditor, and undergoes the specified audit.

Internal Auditing

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 making 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.