Management Structure

Advantest's Purpose & Mission is "Enabling Leading-Edge Technologies." Advantest constantly strives to improve so that we can offer products and services that will satisfy customers around the world, and contribute to the future of society through the development of the most advanced technologies.

In accordance with the corporate mission described in the preceding paragraph, by being open, honest and respectful at all times with all stakeholders, Advantest aims to achieve a sustainable level of business development and enhance corporate value over the mid-to-long term. Advantest always strives to find the best solution to issues, by seeking out root causes and defining their "essence". To that end, Advantest will establish a fair, efficient and transparent governance system.

The global business environment is changing more rapidly than ever before, due to factors such as technological advancement and impact of geopolitical risks. 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.

Please see the information below for the Corporate Governance Report.

The Board of Directors of Advantest, as the 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 supervisory functions of the Board of Directors by having a majority of outside directors.

Regular Board of Directors meetings are held once a month and last about 3 to 5 hours, giving directors time to discuss important matters. In addition, Advantest holds offsite meetings where board members discuss mid-to-long term issues that cannot be discussed within the time limits of Board of Director meetings. The Board of Directors met 13 times at the office and once off-site in FY2023, and all members attended all meetings. At the Board of Directors meetings, directors with a wealth of knowledge and experience expressed their opinions from each point of view on various agendas, and active discussions took place.

In FY2023, the main discussion and reporting items of the Board of Directors meetings and offsite meetings were as follows.

Attendance at meetings of the Board of Directors and important committee meetings in fiscal year 2023 is as follows.

As of June 28, 2024, the Board of Directors of Advantest (including Directors who are Audit and Supervisory Committee members) is composed of two executive directors (inside directors), two non-executive directors (inside directors) and five non-executive directors (outside directors). Two of the directors have non-Japanese nationalities and two are female directors. In order to maintain seamless communication despite the diversification of Directors, Advantest has arranged for simultaneous interpretation at the Board of Directors meetings so that Board members can speak freely in both Japanese and English. Materials and minutes are also translated into English.

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.

The evaluation of the effectiveness of the Board of Directors in FY2022 confirmed that each director was able to discuss issues from different perspectives, and also indicated the importance of further improving sensitivity to changes in the external environment and clarifying the issues in the materials reported at Board of Directors meetings. In response to these evaluation results, the following actions were taken in FY2023.

The composition of the Board of Directors was changed at the General Meeting of Shareholders in June 2023, and outside directors now comprise a majority of the Board. Advantest now has two female directors and continues to have two non-Japanese directors, which confirms that the number of directors and the ratio of outside directors is appropriate. In addition, Mr. Douglas Lefever took over from Mr. Yoshiaki Yoshida as Group CEO effective April 1, 2024. Over the past several years, the Nomination and Compensation Committee has been the main body considering the change in top management and has regularly reported its progress to the Board of Directors. The Board of Directors was satisfied that the succession plan had been adequately discussed, in part because of feedback received from Board members.

On the other hand, the following points were raised as areas for improvement to make the Board of Directors more effective.

In nomination and selection of Directors and Senior Executive Officers, Advantest recognizes that noteworthy issues around the corporate management and communication with stakeholders have to be taken into consideration, in addition to our Purpose & Mission, management strategies, and business strategies. Our business is indispensable for the manufacturing of semiconductors, which support the development of our society, and also assumes the important function of supporting the stable operation of the facilities and systems in our society and industries, creating great opportunities for growth even in the surrounding areas. Advantest has selected the following nine areas of management activities which are considered important for Advantest to grow the business in the medium to long term and realize the improvement of our corporate value: "Management & Corporate Strategy," "Semiconductor," "Technology," "Sales & Marketing," "Finance & Accounting," "Legal & Compliance," "Human Capital Management," "Global Business," and "Digital Transformation". The Board of Directors and the Nomination and Compensation Committee have discussed the essential "insight and experiences" required for the execution of duties and the fulfilment of the responsibly of supervision in the nine areas, and established the required skill sets for Senior Executive Officers and Directors. The skills of the Directors will be as shown in the table below. Following the environmental changes, the skills required by Advantest will be constantly updated.

Details of Skill

The skills of the Directors and Senior Executive Officers will be as shown in the table below.

It is stated in the "Director Training Policy" as follows;

In FY2023, briefings were held for the newly appointed outside directors on the Advantest Group's management policies and business activities. They also toured Advantest's business sites. In addition, all directors visited production sites in South Korea.

All Executive Directors have taken an external training program on governance. Because governance skills are important, we are expanding the scope of the training to Executive Officers who are not directors.

Pursuant to the audit policies, audit plans, priority audit items, allocation of duties, etc., and in coordination with the internal audit division and other relevant departments with jurisdiction over internal control, members of the Audit and Supervisory Committee attended important meetings such as Executive Management Committee, Business Plan Meeting, Internal Control Committee, received reports from Directors, Executive Officers and employees on the performance of their duties, requested further explanations as deemed necessary, reviewed important approval-granting documents, and inspected the state of business operations and assets at the head office and other important branch offices. With respect to subsidiaries, members of the Audit and Supervisory Committee communicated with and exchanged information via interviews with directors of the subsidiaries and opinion exchange meetings with corporate auditors of the subsidiaries and received business reports from subsidiaries as deemed necessary, and conducted audits of Advantest's main consolidated subsidiaries overseas (by interviewing via face to face or web conferences), and confirmed their state of business operations and assets. As a result of these investigations and audit activities, members of the Audit and Supervisory Committee shared our views with the directors and department heads on what we recognized as issues needing feedback.

Advantest's Audit and Supervisory Committee is composed of 1 inside director and 2 outside directors whom are Audit and Supervisory Committee members (of which one is a full-time Audit and Supervisory Committee member)* and is chaired by an outside director. 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 company collaborate with one another so as to carry out regular discussions and timely meetings.

Accounting Auditors perform accounting audits of the consolidated financial statements, accounting documents, etc., and produce an audit report. Regarding accounting audits, Advantest has audited with Ernst & Young ShinNihon LLC and received predetermined audits. EY Shin Nihon LLC Audit Corporation (formerly Daiichi Audit Office) has been conducting listing audits of Advantest since 1983, when Advantest was listed on the Second Section of the Tokyo Stock Exchange. The certified accountants who executed the accounting audit work of Advantest in FY2023 are Mr. Toshiyuki Matsumoto, Mr. Minoru Ota and Mr. Hiroyuki Nakada. The rotation of the certified public accountants is conducted appropriately at Ernst & Young ShinNihon LLC and no certified public accountants are involved in accounting audits of same company for more than seven consecutive fiscal years. Lead certified public accountants are not involved in accounting audits of the same company for more than five consecutive fiscal years. If a certified public accountant is involved in accounting audits of the same company for seven consecutive fiscal years, he or she will be involved in accounting audits of that company only after an interval of five fiscal years. Lead certified public accountants who are involved in accounting audits of the same company for five consecutive fiscal years will not be involved in accounting audits of that company again. In addition, assistants performing Advantest's accounting audit work include those with expert knowledge such as system experts, with CPAs as the main constituents.

Advantest has established an internal auditing team that comprises the Auditing Group in headquarter and overseas subsidiaries. To verify whether Advantest's day-to-day operations are carried out appropriately and efficiently in accordance with the requirements of relevant domestic and overseas laws ordinances, and internal rules, the internal auditing team implements operational auditing, compliance auditing and internal controls auditing. Besides evaluating the efficiency of the internal controls system, the internal auditing team also provides support to assist in making improvements at individual business locations, when necessary. 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.

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 related to the nomination and compensation of Directors and Executive Officers, and makes proposals to the Board of Directors. The Committee met 14 times during FY2023. All the members were present at every Nomination and Compensation Committee meeting.

The main discussion agenda of the Nomination and Compensation Committee is as follows.

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.

Advantest delegates the necessary authorities to ensure the prompt and efficient performance of duties and the Executive Management Committee is positioned as a decision-making body for Advantest's important business execution matters. Among Executive Officers, those who are deemed capable of leading the group management are nominated as Senior Executive Officers who serve as members of the Executive Management Committee. More than half of the members are executive officers of non-Japanese nationality, and Mr. Douglas Lefever is the chairperson. Meetings of the committee are held about twice a month, mainly online.

We have Introduced a CxO system to clarify management accountability in order to reinforce a global HQ management system further. As of July 2024, five CxOs are responsible for nine CxO functions, with the Group CEO and Group COO sharing responsibility for each CxO. We have designated the CxOs as individuals who are suitable to assume these functions from a global perspective, and strive to build a system that enables management as a unified group.