Audit and Risk Committee

The Audit and Risk Committee assists the Board in fulfilling its oversight of the quality and integrity of the accounting, auditing, reporting, and financial control practices, as well as risk management of the Company.

The Audit and Risk Committee is responsible to review the following major matters:

  • Financial reports;
  • Auditing and accounting policies and procedures; 
  • Internal control systems and related policies and procedures; 
  • Material asset or derivatives transactions; 
  • Material lending funds, endorsements or guarantees; 
  • Offering or issuance of any equity-type securities; 
  • Derivatives and cash investments; 
  • Legal compliance; 
  • Related-party transactions and potential conflicts of interests involving executive officers and directors; 
  • Ombudsman reports; 
  • Fraud prevention and investigation reports; 
  • Corporate information security; 
  • Corporate risk management; 
  • Performance, independence, qualification of independent auditor; 
  • Hiring or dismissal of an attesting CPA, or the compensation given thereto; 
  • Appointment or discharge of financial, accounting, or internal auditing officers; 
  • Assessment of Committee Charter and fulfillment of Committee duties;
  • Self-assessment of the Committee’s performance; and
  • Any other matters that shall be reviewed by the Audit and Risk Committee Meeting as required by relevant laws and regulations or its Committee Charter, or that are deemed to be material by the regulatory authorities.

Under R.O.C. law, the membership of audit committee shall consist of all independent directors. TSMC’s Audit and Risk Committee satisfies this statutory requirement. The Committee also engaged a financial expert consultant in accordance with the rules of the U.S. Securities and Exchange Commission. The Audit and Risk Committee annually conducts self-evaluation to assess the Committee’s performance and identify areas for further attention.

TSMC’s Audit and Risk Committee is empowered by its Charter to conduct any study or investigation it deems appropriate to fulfill its responsibilities. It has direct access to TSMC’s internal auditors, the Company’s independent auditors, and all employees of the Company. The Committee is authorized to retain and oversee special legal, accounting, or other consultants as it deems appropriate to fulfill its mandate.

 

Audit and Risk Committee Members’ Professional Qualifications and Experiences

Please refer to Directors' Biographies.

 

Audit and Risk Committee Meeting Status in 2024

Tenures of the Audit and Risk Committee members are from June 4, 2024 to June 3, 2027. The Chairman of the Audit and Risk Committee, convened four regular meetings and one special meeting in 2024. In addition to these meetings, he also convened one special meeting and three telephone conferences to review the Company’s Annual Report to be filed with the Taiwan and U.S. authorities and investor conference materials. The Committee members’ and consultant’s attendance status is as follows.

Title Name Attendance in Person By Proxy Attendance Rate in Person (%) Telephone
Conferences
Attendance Rate of Telephone 
Conferences (%)
Notes
Chair

Sir Peter L. Bonfield

6 0 100% 3 100% Renewal of office (Note)
Member Michael R. Splinter 6 1 80% 3 100% Renewal of office (Note)
Member Moshe N. Gavrielov 6 0 100% 3 100% Renewal of office (Note)
Member L. Rafael Reif 6 0 100% 0 0% Renewal of office (Note)
Member Ursula M. Burns 3 0 100% 2 100% New office assumed (Note)
Member Lynn L. Elsenhans 3 0 100% 2 100% New office assumed (Note)
Member Chuan Lin 3 0 100% 2 100% New office assumed (Note)
Member Kok-Choo Chen 3 0 100% 1 100% Term expired (Note)
Member Yancey Hai 3 0 100% 1 100% Term expired (Note)
Financial Expert Consultant Jan C. Lobbezoo 6 0 100% 3 100% None

Annotations:
A.    (1) Resolutions related to Securities and Exchange Act §14-5:

Meeting Date Resolution
2024 1st Regular Meeting
February 5
  • 2023 business report
  • 2023 fourth quarter earnings distribution
  • Capital injection of not more than US$5.262 billion to Japan Advanced Semiconductor Manufacturing, Inc. (JASM)
  • If TSMC Arizona is able to receive CHIPS Incentive Awards pursuant to the CHIPS Act via entering into CHIPS Incentive Awards agreements with the United States Department of Commerce (“DOC”), a parent guarantee is to be provided by TSMC to the DOC for the obligations of TSMC Arizona arising from the said agreements, and the final amount of the parent guarantee is to be determined by the authority granted to the Chairman of the Board so long as it is within the authorized amount, and is subject to subsequent ratification at the next Board meeting
  • Capital injection of not more than US$5 billion to TSMC Arizona
  • Capital injection of not more than US$3 billion to TSMC Global Ltd.
  • Issuance of total 2,960,000 shares of 2023 employee restricted stock awards Issuance of 2024 employee restricted stock awards
  • 2023 Statement of Internal Control System
2024 2nd Special Meeting
May 10
  • 2024 first quarter financial statements
  • 2024 first quarter business report
  • 2024 first quarter earnings distribution
2024 2nd Regular Meeting
June 4
  • Capital injection of not more than US$5 billion to TSMC Global Ltd.
  • Related-party sale of existing TSMC equipment to TSMC Arizona
  • Amendments to TSMC’s internal control related policies and procedures
2024 3rd Regular Meeting
August 12
  • 2024 second quarter financial statements
  • 2024 second quarter business report
  • 2024 second quarter earnings distribution
  • The subscription of new shares to be issued by Vanguard International Semiconductor Corporation (VIS)
  • Capital injection of not more than US$7.5 billion to TSMC Arizona
  • Ratification of TSMC’s security investments classified as non-current assets
  • Related-party sale of existing TSMC equipment to JASM
  • Issuance of total 2,353,000 shares of 2024 employee restricted stock awards
2024 4th Regular Meeting
November 11
  • 2024 third quarter financial statements
  • 2024 third quarter business report
  • 2024 third quarter earnings distribution
  • NTD corporate bond issuance
  • A 3rd investment in an amount of US$100 million to Emerging Fund and net proceeds from the transactions of its can be reinvested
  • Ratification of the parent guarantee provided by TSMC to the United States Department of Commerce (“DOC”) for the obligations of TSMC Arizona under the agreements that TSMC Arizona has entered into with the DOC for the receipt of CHIPS Incentives Awards pursuant to the CHIPS Act
  • 2025 service fees and out-of-pocket expenses for Deloitt

Independent directors’ objections, reservations or major suggestions: None.

Resolution of the committee and the Company’s response to the committee’s opinion: The members of the Committee unanimously approved all the resolutions, and the Board of Directors approved all such resolutions recommended by the Committee.

  (2) There were no other resolutions which was not approved by the Committee but was approved by two thirds or more of all directors in 2024.

B.    Recusals of Independent Directors due to conflicts of interests: Mr. Moshe N. Gavrielov, serving as a Director of NXP Semiconductors N.V. (NXP), recused himself from participating in the discussion and voting on the proposal regarding TSMC’s subscription to new shares to be issued by VIS for financing a joint venture 12-inch wafer fab with NXP.

Note: Sir Peter L. Bonfield, Mr. Michael R. Splinter, Mr. Moshe N. Gavrielov, Dr. L. Rafael Reif, Ms. Ursula M. Burns, Ms. Lynn L. Elsenhans and Dr. Chuan Lin were elected as TSMC’s independent director at Annual Shareholders’ Meeting on June 4, 2024, and became member of the Audit and Risk Committee.

 

Descriptions of Independent Directors’ Communications with the Internal Auditors and the Independent Auditors in 2024

These Closed Door Sessions relate to corporate finance and operations matters, and are between the Independent Directors and the Internal Auditors or the Independent Auditors. The communication principles are as follows,

  1. The internal auditors have sent the audit reports to the members of the Committee periodically and presented the findings of all audit reports in the quarterly meetings of the Committee. The head of Internal Audit will immediately report to the members of the Committee any material matters. During 2024, the head of Internal Audit did not report any such material matters. The communication channel between the Committee and the internal auditor functioned well.
  2. The Company’s independent auditors have presented the findings of their quarterly review or audits on the Company’s financial results. Under applicable laws and regulations, the independent auditors are also required to immediately communicate to the Committee any material matters that they have discovered. During 2024, the Company’s independent auditors did not report any irregularity. The communication channel between the Committee and the independent auditors functioned well.

 

The Communications between the Independent Directors and the Internal Auditors or the Independent Auditors

Audit and Risk Committee Meeting Date Communications between the Independent Directors and the Internal Auditors Communications between the Independent Directors and the Independent Auditors
2024 1st Regular Meeting
February 5
  • Internal Auditor’s report (Closed Door Session)
  • Report on SOX 404 self-testing results for the year 2022 (Closed Door Session)
  • 2022 Statement of Internal Control System (Closed Door Session)
  • External auditor relationship (i.e. qualification, performance and independence)
  • Report of regulatory developments
  • Any audit problems or difficulties and management’s response in connection with 2023 annual financial statements (Closed Door Session)
2024 2nd Special Meeting
May 10

-

  • Any review problems or difficulties and management’s response in connection with 2024 first quarter financial statements (Closed Door Session)
2024 2nd Regular Meeting
June 4
  • Internal Auditor’s report (Closed Door Session)
  • Amendments to TSMC’s internal control related policies and procedures (Closed Door Session)
  • The result of 2023 CPA evaluation questionnaire
  • Report of regulatory developments
  • Annual audit plan (Closed Door Session)
2024 3rd Regular Meeting
August 12
  • Internal Auditor’s report (Closed Door Session)
  • Report of regulatory developments
  • Any review problems or difficulties and management’s response in connection with 2024 second quarter financial statements (Closed Door Session)
2024 4th Regular Meeting
November 11
  • Internal Auditor’s report (Closed Door Session)
  • 2025 internal audit plan (Closed Door Session)
     
  • External auditor relationship (i.e. qualification, performance and independence)
  • Report of regulatory developments
  • Any review problems or difficulties and management’s response in connection with 2024 third quarter financial statements (Closed Door Session)

Result: all of the above matters were reviewed and/or approved by the Committee whereupon Independent Directors raised no objection.

 

Board Committee Membership
Name Audit and Risk Committee Compensation and People
Development Committee
Nominating, Corporate Governance
and Sustainability Committee
C.C. Wei (Chairman)     V
Peter L. Bonfield (Independent Director) V (Chair) V  
Michael R. Splinter (Independent Director) V V (Chair)  
Moshe N. Gavrielov (Independent Director) V V  
L. Rafael Reif (Independent Director) V   V
Ursula M. Burns (Independent Director) V V  
Lynn L. Elsenhans (Independent Director) V   V
Chuan Lin (Independent Director) V   V (Chair)
Jan C. Lobbezoo Note (Financial Expert Consultant)    
Note: Jan C Lobbezoo was appointed to serve as financial expert consultant to TSMC Audit and Risk Committee from April 1, 2007. He currently serves on the Supervisory Board of a private owned investment company in the Netherlands; he is also a member of the Advisory Board of the Register Accountant education at the University of Maastricht. Jan C Lobbezoo worked at the Philips Group for approximately 36 years in various Finance and Control functions, in countries like Nigeria, South Africa, Scandinavian countries as well as The Netherlands. He served for over 11 years as CFO of Philips Semiconductors (now known as NXP) until 2005. Thereafter he became Executive Vice-President of Philips International until retirement in December 2006. He was Philips’ representative and served as a Director of TSMC Board between 1994 to March 2007. He holds a master degree in business economics from the Erasmus University in Rotterdam, The Netherlands; where he also obtained an accounting degree as Register Accountant. He is a member of the Dutch Institute of Chartered Accountants (NBA).
Nominating, Corporate Governance and Sustainability Committee

The Nominating, Corporate Governance and Sustainability Committee assists the Board in strengthening the selection mechanism for directors, building diversified and professional board, selecting candidates for nomination to be elected as independent directors to the Board, and advising on corporate governance and sustainability matters.

According to its Charter, the Committee shall be composed of the Chairman of the Board and three to six independent directors. Currently, the Committee consists of the Chairman of the Board and three Independent Directors.

The Nominating, Corporate Governance and Sustainability Committee is authorized by its Charter to hire independent legal, financial and other advisors as it may deem necessary to fulfill its responsibilities.

 

Nominating, Corporate Governance and Sustainability Committee Meeting Status in 2024

According to its Charter, the Committee shall be composed of the Chairman of the Board and three to six independent directors. The Nominating, Corporate Governance and Sustainability Committee assists the Board in strengthening the selection mechanism for directors, building diversified and professional board, selecting candidates for nomination to be elected as independent directors to the Board, and advising on corporate governance and sustainability matters. 

TSMC’s Nominating, Corporate Governance and Sustainability Committee is comprised of four members. Tenures of the Committee members are from June 4, 2024 to June 3, 2027. The Chairman of the Committee convened four meetings in 2024. The Committee members’ professional qualification and experience, attendance status, and discussion items are as follows:

Criteria Professional Qualification and Experience Attendance in Person By Proxy (Note) Attendance Rate in Person
(%)
Notes
Name/Title
Chuan Lin (Chair)
Independent Director
TSMC’s Nominating, Corporate Governance and Sustainability Committee is comprised of the Chairman of the Board and three independent directors. For members professional qualification and experience, please refer to Directors' Biographies 3 0 100% New office assumed (Note)
C.C. Wei
Chairman of the Board
3 0 100% New office assumed (Note)
L. Rafael Reif
Independent Director
3 75% Renewal of office (Note)
Lynn L. Elsenhans
Independent Director
3 0 100% New office assumed (Note)
Moshe N. Gavrielov 
Independent Director
1 0 100% Term expired (Note)
Mark Liu
Chairman of the Board
1 0 100% Retirement (Note)
Sir Peter L. Bonfield
Independent Director
1 0 100% Term expired (Note)
Kok-Choo Chen
Independent Director
1 0 100% Term expired (Note)
Michael R. Splinter 
Independent Director
1 0 100% Term expired (Note)
Yancey Hai
Independent Director
1 0 100% Term expired (Note)

Annotations:

A. In 2024, the Nominating, Corporate Governance and Sustainability Committee conducted four meetings on February 5, June 4, August 12 and November 11.  The discussion items were as follows:

  • Committee’s operation
  • Reviewing the press release for director candidates
  • Reviewing the result of the Committee 2023 annual assessment questionnaire
  • Reviewing the standing agenda for 2024 Committee meetings
  • Amendments of the TSMC’s “Corporate Governance Guidelines” and “Nominating, Corporate Governance and Sustainability Committee Charter”
  • Reviewing Quarterly ESG report
  • Annual reviewing and assessing the fulfillment of Committee duties

  All of the above matters were reviewed, discussed and/or approved by the Committee.

B. There were no resolutions on which any member of the Committee had an objection opinion.

C. The Board of Directors approved and adopted all recommendations of the Committee without modification.

Note: The Committee members shall attend the meetings in-person, and there is no proxy available for the Committee members who are unable to attend the meeting.

Note: TSMC Board approved the appointment of Dr. Chuan Lin, Dr. CC Wei, Dr. L. Rafael Reif and Ms. Lynn L. Elsenhans as members of Nominating, Corporate Governance and Sustainability Committee on June 4, 2024.

 

Compensation and People Development Committee

The Compensation and People Development Committee assists the Board in discharging its responsibilities related to TSMC’s compensation and benefits policies, plans and programs, in evaluation of compensation of TSMC’s directors of the Board and executives, and the review of the pipeline planning of the Company’s senior executives to ensure the long-term sustainability of the Company.

The members of the Compensation and People Development Committee are appointed by the Board as required by R.O.C. law. According to its charter, the Committee shall consist of no fewer than three independent directors of the Board, whereas the actual Committee is comprised of four Independent Directors. The Chairman of the Board and the Chief Executive Officer are invited by the Committee to attend all meetings and are excused from the Committee’s discussion of their own compensation.

TSMC’s Compensation and People Development Committee is authorized by its charter to retain an independent consultant to assist in the evaluation of CEO’s or executive officer’s compensation.

 

Compensation and People Development Committee Meeting Status in 2024

Tenures of the Compensation and People Development Committee members are from June 4, 2024 to June, 2027. The Chairman of the Compensation and People Development Committee, convened four regular meetings and one special meeting in 2024. The Committee members’ qualification and attendance are as follows.

Title Name Attendance in Person By Proxy Attendance Rate in Person (%) Notes
Chair Michael R. Splinter 5 0 100% Renewal of office (Note)
Member Sir Peter L. Bonfield 5 0 100% Renewal of office (Note)
Member Moshe N. Gavrielov 5 0 100% Renewal of office (Note)
Member Ursula M. Burns 3 0 100% New office assumed (Note)
Member L. Rafael Reif 2 0 100% Term expired (Note)
Member Kok-Choo Chen 2 0 100% Term expired (Note)
Member Yancey Hai 2 0 100% Term expired (Note)

Annotations:
A. In 2024, the Compensation and People Development Committee conducted four regular meetings on February 5, June 4, August 12 and November 11 and one special meeting on May 10.  The discussion items were as follows:

  • Report on matters related to employee compensation
  • Total amount of quarterly business performance bonus
  • Total amount of annual profit sharing
  • The amount of quarterly business performance bonus for executive officers, CEO and Chairman
  • The annual compensation of directors and executive officers, and the disclosure of same in the Annual Report
  • Vest of Employee restricted stock awards for 2021 and 2022
  • Grant of Employee restricted stock awards for 2023 and 2024
  • Employee restricted stock awards rules for 2024
  • 2025 Executive Equity Based Compensation Plan
  • Organization and Executive Succession Discussion

     All of the above matters were reviewed and/or approved by the Committee.

B. The Board of Directors adopted all recommendations of the Committee without modification.

C. There were no written or otherwise recorded resolutions on which any member of the Committee had an objection or reservation opinion.

Note: TSMC Board of Directors approved the appointment of  Michael R. Splinter, Sir Peter L. Bonfield, Mr. Moshe N. Gavrielov, and Ms. Ursula M. Burns as members of the Compensation and People Development Committee.

 

Chairman, CEO, and Executive Officers’ Shareholding Requirements

TSMC believes that the long-term ownership of Company shares by corporate officers helps align their interests with those of all shareholders, therefore, the Company formulated Corporate Officer Shareholding Guidelines in 2020. The required value for Chairman, CEO, and other corporate officers’ holding of TSMC shares is proportional to their annual base salary: 18 times for Chairman and CEO, 9 times for other officers in Taiwan, and 3 times for overseas officers. Officers shall fulfill the required value within 3 years of appointment and maintain the required value for the entire period of employment.