The Audit Committee assists the Board in fulfilling its oversight of the quality and integrity of the accounting, auditing, reporting, and financial control practices of the Company.
The Audit Committee is responsible to review the following major matters:
- Financial reports;
- Auditing and accounting policies and procedures;
- Internal control systems and including 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 Audit Committee duties; and
- Assessment of the Committee's performance, etc.
Under R.O.C. law, the membership of Audit Committee shall consist of all independent Directors. TSMC's Audit 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 Committee annually conducts self-evaluation to assess the Committee's performance and identify areas for further attention.
TSMC's Audit 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.
The Committee meets at least once every quarter. Please consult TSMC's Taiwan Annual Report for the relevant year for the number of meetings convened and each member's attendance rate.
Descriptions of the Communications between the Independent Directors and the Internal Auditors or the Independent Auditors
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,
- The internal auditors have sent the audit reports to the members of the Audit Committee periodically and presented the findings of all audit reports in the quarterly meetings of the Audit Committee. The head of Internal Audit will immediately report to the members of the Audit Committee any material matters.
- 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 Audit Committee any material matters that they have discovered.
The Communications between the Independent Directors and the Internal Auditors or the Independent Auditors
|Meeting Dates||Communications between the Independent Directors and the Internal Auditors||Communications between the Independent Directors and the Independent Auditors|
|2020 1st Regular Meeting
|2020 2nd Regular Meeting
|2020 3rd Regular Meeting
|2020 4th Regular Meeting
Result: all of the above matters were reviewed and/or approved by the Audit Committee whereupon independent directors raised no objection.
|Name||Audit Committee||Compensation Committee|
|Peter L. Bonfield(Independent Director)||(Chair)|
|Kok-Choo Chen (Independent Director)|
|Michael R. Splinter;(Independent Director)||(Chair)|
|Moshe N. Gavrielov (Independent Director)|
|Yancey Hai (Independent Director)|
|Rafael Reif (Independent Director)|
|Jan Lobbezoo Note||(Financial Expert Consultant)|
|Note：||Jan C Lobbezoo was appointed to serve as financial expert consultant to TSMC Audit Committee from April 1, 2007. He currently serves as the Chairman of the Supervisory Board of ASMI NV, a supplier of semiconductor wafer processing equipment and process solutions. He also serves on the supervisory board of several private companies in the Netherlands. Jan C Lobbezoo worked at the Philips group for approximately 36 years in various finance and control positions in countries like Nigeria, South Africa, Scandinavia 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).|
The Compensation Committee assists the Board in discharging its responsibilities related to TSMC’s compensation and benefits policies, plans and programs, and in the evaluation and compensation of TSMC’s directors of the Board and executives.
The members of the Compensation Committee are appointed by the Board as required by R.O.C. law. According to TSMC’s Compensation Committee Charter, the Committee shall consist of no fewer than three independent directors of the Board. The Compensation Committee is comprised of all 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 Committee is authorized by its Charter to retain an independent consultant to assist in the evaluation of CEO, or executive officer compensation.
The Committee meets at least once every quarter. Please consult TSMC’s Taiwan Annual Report for the relevant year for the number of meetings convened and each member’s attendance rate.
Compensation Committee Meeting Status in 2020
Mr. Michael R. Splinter, Chairman of the Compensation Committee, convened four regular meetings in 2020. The Committee members’ attendance status is as follows:
|Title||Name||Attendance in Person||By Proxy||Attendance Rate in Person (%)||Notes|
|Chair||Michael R. Splinter||4||0||100%||None|
|Member||Sir Peter L. Bonfield||4||0||100%||None|
|Member||Moshe N. Gavrielov||4||0||100%||None|
|Member||Yancey Hai||3||0||100%||New office assumed (Note)|
All of above matters were reviewed and/or approved by the Compensation Committee.
B. There was no recommendation of the Compensation Committee which was not adopted or was modified by the Board of Directors in 2020.
C. There were no written or otherwise recorded resolutions on which a member of the Compensation Committee had a dissenting opinion or qualified opinion.
Note: The Board appointed Mr. Yancey Hai as a member of the Compensation Committee on February 11, 2020.