Management Structure

Our Basic Policy of Corporate Governance

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.

• Advantest Corporate Governance Policy (PDF 183KB)

Corporate 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.

List of Governance Systems (As of June 27, 2023)
Structure	Company with an Audit and Supervisory Committee
Number of Directors	9
Number of Outside Directors	5(55.5%)
Number of Non-Japanese Directors	2(22.2%)
Number of Female Directors	2(22.2%)
Term of Office for Directors who are Not Audit and Supervisory Committee members	1 year
Term of Office for Directors who are Audit and Supervisory Committee members	2 years
Number of Directors who are Audit and Supervisory Committee members	3
Number of Outside Directors	2
Chairperson of Audit and Supervisory Committee	Outside Director
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
Performance-linked Remuneration System	In place
Executive Officer System	In place
Executive Officers	25
Non-Japanese Executive Officers	13

Please see the information below for the Corporate Governance Report.

• Corporate Governance Report (PDF 866KB)

Board of Directors

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 so as to appoint multiple outside directors as members of the Board of 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 14 times at the office and twice off-site in FY2022, 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 FY2022, the main discussion and reporting items of the Board of Directors meetings and offsite meetings were as follows.

• The Board of Directors discussed the progress of the Second Mid-Term Management Plan (MTP2), confirmed the importance of growth investments such as M&A and digital transformation, and reviewed the financial model of MTP2.
• Advantest's changing business environment, including changes in the semiconductor market and geopolitical risks caused by the US-China conflict, were reported on and measures to address the issues were discussed.
• Monthly reports on the current status of sales, profits, inventory levels, cash flow and other relevant factors are made to the Board of Directors to monitor the execution of business operations.
• More effective financing methods were discussed in the agenda of commitment line agreements and long-term borrowing.
• M&As were discussed as growth investments, and the Board decided on the M&A of CREA [Collaudi Elettronici Automatizzati S.r.l.] and Shin Puu Technology Co., Ltd..
• Internal audit reports and compliance reports were made to the Board of Directors twice a year. The reports included reports from Advantest's internal audit system, items pointed out by internal audits and compliance incidents from helpline notifications.
• IR reports were made to the Board of Directors twice this year, which included status of communication with investors and investors' awareness of issues.
• ESG reports were made to the Board of Directors twice this year, which included status of Advantest's climate change initiatives and other ESG initiatives.

Attendance at meetings of the Board of Directors and important committee meetings in fiscal year 2022 is as follows.

Classification		Name	Attendance at Board of Directors meetings (14 times)	Attendance at Nomination and Compensation Committee meetings (14 times)	Attendance at Audit and Supervisory Committee meetings (13 times)
Inside Director	Executive Director	Yoshiaki Yoshida	100% (14 times)	100% (14 times)	－
		Douglas Lefever	100% (14 times)	－	－
		Koichi Tsukui	100% (14 times)	－	－
		Soichi Tsukakoshi	100% (14 times)	－	－
		Atsushi Fujita	100% (14 times)	－	－
	Non-Executive Director	Yuichi Kurita	100% (14 times)	－	100% (13 times)
Outside Director		Osamu Karatsu	100% (14 times)	－	－
		Toshimitsu Urabe	100% (14 times)	100% (14 times)	－
		Nicholas Benes	100% (14 times)	－	－
		Kouichi Nanba	100% (14 times)	－	100% (13 times)
		Sayaka Sumida	100% (14 times)	100% (14 times)	100% (13 times)

As of June 27, 2023, the Board of Directors is composed of 3 executive directors (inside directors), 1 non-executive director (inside director), and 5 non-executive directors (outside directors) for a total of 9 members (including Directors who are Audit and Supervisory Committee members), of which 2 directors have non-Japanese nationalities, and 2 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.

Evaluation of the Board of Directors' Effectiveness

At a Board of Directors' meeting, all directors answered a questionnaire to evaluate the effectiveness of their roles and obligations. Their opinions on the structure of the Board of Directors, operation, and discussion status were collected and analyzed.

(Results in FY2021 and action in FY2022)

Our evaluation of the effectiveness of the Board of Directors in FY2021 indicated that greater awareness of the external environment was required in reporting to the Board of Directors, the method of evaluation itself should be reviewed, and more time should be devoted to discussion versus to reporting. In response to the above, Advantest implemented the following measures in FY2022.

• Regarding the evaluation of the effectiveness of the Board of Directors, the questions have been significantly revised to address the following points:
  　- whether the Board of Directors was able to appropriately incorporate external knowledge, and
  　- whether the discussions at the Board of Directors were being utilized by the executive side
• We are trying to allow more time for discussion by the Board of Directors by requiring presenters to use an executive summary and provide a concise statement.

(Results in FY2022)

Our directors have diverse backgrounds. In our FY2022 effectiveness evaluation, revising some questions revealed that each director often discusses matters from a different perspective than other members. The company believes that this shows that the diversity of the Board of Directors has been ensured and has advantages. On the other hand, the following points were raised as improvements to make the Board of Directors more effective.

• Regarding changes in the external environment (changes in the business environment of our company), Advantest management is already accustomed to a certain degree of sensitivity to cycles in the semiconductor testing industry to which our group belongs. On the other hand, it is advisable that the company's sensitivity to other aspects of the external environment (i.e. society, politics, economy, industry in general, etc.) should be enhanced.
• It is preferable that matters to be discussed should be clearly stated in materials reported to the Board of Directors.

Skill Matrix

In the nomination and selection of Directors and Senior Executive Officers, the Company 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. The Company has selected the following nine areas for management activities which are considered important for the Company 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 responsibility of supervision in the nine areas, and established the required skill sets for Directors and Senior Executive Officers.

Details of Skill

Areas for management activities		Items	Experience, knowledge, and abilities expected
①	Management & Corporate Strategy	Top management	Management experience at a company or legal entity (as a chairperson, president, representative director or equivalents)
		Management strategy	Experience as a head of a management strategies department*1,2
		Experience and knowledge of business investment and M&A	Experience and knowledge of business investment and M&A
②	Semiconductor	Knowledge of the semiconductor-related industries	Experience in semiconductor-related industries and knowledge of the semiconductor industry
③	Technology	Knowledge of the industries & technologies (incl. Environment and Energy)	Knowledge of the electrical/electronics related industry and ICT technologies
		Research & development	Experience as a head of an R&D department*1,2
		SCM*3, production, and quality assurance	Experience as a head of SCM*3, production, production engineering, and quality assurance departments*1,2
④	Sales & Marketing	Sales and marketing	Experience as a head of a sales and marketing department*1,2
⑤	Finance & Accounting	Finance and accounting	Experience as a head of a finance and accounting department*1,2 or as a certified public accountant
		Communication with the capital market	Experience as a head of the department responsible for communicating with investors and shareholders*1,2, such as a head of IR (Investor Relations) or SR (Shareholder Relations) department
⑥	Legal & Compliance	Legal affairs, risk management, and compliance	Experience as a head of a legal affairs, risk management, or compliance department*1,2 or as an attorney at law
⑦	Human Capital Management	Human capital management	Experience and knowledge as a head of an HR department*1,2, or in recruiting & developing human capital, and talent management
⑧	Global Business	Global business	Experience at a global organization or experience working in a foreign country
⑨	Digital Transformation	IT & DX	Experience as a head of an IT department*1,2, and as a head of a DX promotion department*1,2

*1 The head of a large company or a company with complicated businesses or operations

*2 The executive of a specialized service company in the relevant field

*3 Supply Chain Management

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

* Scroll down the table to see the entire list.

* Skills of the Senior Executive Officers (excluding those concurrently serving as Directors) as of June 27, 2023 are as follows.

Reasons of Appointment of Outside Directors

Name	Reasons of Appointment
Toshimitsu Urabe	Mr. Toshimitsu Urabe has extensive management experience at a leading Japanese general trading company and a nonbank financial institution, particularly overseas experience in the United States and Asia, experience in business investment decisions, etc., and extensive experience in administrative management, for example human resources and IT. He is expected to reflect his knowledge in Advantest Group's global management, thereby contributing to the sustainable enhancement of corporate value and invigorating the activities of the Board of Directors. Thus, Advantest believes that he is a suitable person as an outside director.
Nicholas Benes	Mr. Nicholas Benes has extensive knowledge and experience about corporate governance matters, and experience in investment banking including M&A transactions. He is expected to reflect his knowledge of corporate governance and the shareholder-oriented perspective in Advantest Group's global management, thereby contributing to the sustainable enhancement of corporate value and invigorating the activities of the Board of Directors. Thus, Advantest believes that he is a suitable person as an outside director.
Naoto Nishida	Mr. Naoto Nishida has a wealth of knowledge and experience as a laser technology expert, in addition to his experience in the fields of technology, supply chain management (SCM), production, and research & development at a global company deeply involved in semiconductors. He is expected to reflect his insights into our business, industry and technology and the perspectives on strategic innovation in Advantest Group's global management, thereby contributing to the sustainable enhancement of corporate value and invigoration of the activities of the Board of Directors. Thus, Advantest believes that he is a suitable person as an outside director.
Sayaka Sumida	Ms. Sayaka Sumida has not been directly involved in the management of a company in the past, but she has a wealth of knowledge and experience in finance and accounting gained through her engagement for many years in accounting/auditing services and internal control-related services as a certified public accountant at an accounting firm. She is expected to reflect her knowledge of finance and accounting in Advantest Group's audit and supervision, thereby contributing to the enhancement of corporate accounting and internal controls. Thus, Advantest believes that she is a suitable person as an outside director who is an audit and supervisory committee member.
Tomoko Nakada	Although Ms. Tomoko Nakada has not been directly involved in the management of a company in the past, she has a wealth of experience and a high level of expertise in law as a judge and as a lawyer, engaging in the practice of corporate legal affairs, general civil cases, and domestic and international inheritance cases. She is expected to reflect her knowledge of laws in Advantest Group's audit and supervision, thereby contributing to the enhancement of compliance. Thus, Advantest believes that she is a suitable person as an outside director who is an audit and supervisory committee member.

• Directors and Executive Officers

Director Training

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

Director Training Policy

1. Advantest provides and arranges following actions for new Directors to acquire necessary knowledge on the Advantest's business, finances, organizations and other matters so as to enhance their understanding of their roles and responsibilities: (1) To explain the roles and responsibility required for Directors; (2) To explain Advantest group's business, finances, organizations, major internal regulations, corporate governance structure, and internal control systems; (3) To update above (1) and (2) for incumbent Directors as necessary. 2. Advantest should provide and arrange training opportunities suitable for each director as necessary.

In FY2022, Advantest provided explanations for our foreign directors on their responsibilities under Japanese law. 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.

Audit and Supervisory Committee

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.

* The number of people given is correct as of June 27, 2023.

Accounting Auditors

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 2022 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.

Internal Audits

Advantest has established an internal auditing team that comprises the Auditing Group in head quarter and overseas subsidiaries. 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 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.

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 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 FY2022. All the members were present at every Nomination and Compensation Committee meeting.

* The number of people given is correct as of June 27, 2023.

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

• Candidates for Directors and Executive Officers and the Management Structure
  Under the structure of directors and managing executive officers since June 2022, the Committee has considered appropriate candidates and proposed them to the Board of Directors. The management structure for strengthening the CxOs was discussed and proposed to the Board of Directors.
  The Committee discussed management structure in response to changes in the business environment including business expansion, acceleration of further growth, and preparation for future generational changes, and proposed transition to a three-member representative director structure to the Board of Directors.
  Under the organizational structure for directors and managing executive officers after June 2023, the Committee considered appropriate candidates and a management structure with three representative directors, and proposed them to the Board of Directors.
• Succession Plan for CEO
  After analyzing management issues and personnel requirements for the CEO and management team, the Committee held discussions after receiving reports and assessment of some of the Senior Executive Officers and a survey on external human resources from an external HR consulting firm. In these discussions, the Committee referred to the annual CEO assessment by non-executive directors and interviews with non-executive directors and Senior Executive Officers. Based on discussions with the non-executive directors, the Committee decided on a succession candidate and a transition plan and proposed both to the Board of Directors.
• Experience, knowledge, and abilities required of Directors and Senior Executive Officers (skill matrix)
  Recognizing that the Skill Matrix is a tool to consider the most appropriate executive team and board structure, the Committee has set the elements of experience, knowledge, and abilities required of Directors and Senior Executive Officers based on discussions with non-executive directors.
• Operation of Fixed Compensation, Performance-based Bonuses and Stock Compensation
  Individual evaluations of executive bonuses for FY2021 were discussed and finalized.
  The Committee discussed and proposed to the Board of Directors the fixed compensation, performance indicators for performance-linked bonuses and stock compensation for FY2022.
  In addition, the Committee established a process to define the roles and expected performances of each Director/Officer and evaluate the results.
  Based on that, the Committee discussed fixed compensation for FY2023.

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.

• Directors and Executive Officers Nomination/Dismissal Policy and Procedures (PDF 180KB)
• Policies and Procedures for Determining Compensation for Directors and Executive Officers (PDF 61KB)

Executive Management Committee

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. Half of the members are executive officers of non-Japanese nationality, and Mr. Yoshiaki Yoshida is the chairperson. Meetings of the committee are held about twice a month, mainly online.

CxO System

We have Introduced a CxO system to clarify management accountability in order to reinforce a global HQ management system further. As of July 2023, six CxOs are responsible for nine CxO functions, with the Group CEO, Group COO, and Group Co-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.