Human Capital

Human capital is one of the most important assets of TSMC. The Company is committed to providing quality jobs with good compensation, challenging work, and comfortable work environment for its employees, and it is dedicated to foster a dynamic and fun work environment. In 2013, TSMC was named the “Most Admired Company in Taiwan” by CommonWealth Magazine for the 17th consecutive year.

At the end of 2013, TSMC and its subsidiaries had over 40,483 employees worldwide, including 4,078 managers, 17,205 professionals, 3,236 assistants, and 15,964 technicians. The following table summarized TSMC workforce at the end of February, 2014:

TSMC Workforce Structure

Recruitment

TSMC is an equal employment opportunity employer, and its practices center on the principles of open-and-fair recruitment. The Company evaluates all candidates according to their qualification as related to the requirement of each position, rather than race, gender, age, religion, nationality, or political affiliation.

Although facing a softer global economy, TSMC’s continuous growth requires constant talent sourcing and recruitment activities to support its business. The Company recruited over 3,300 managers, professionals, and administrative staffs, as well as over 1,300 assistants and technicians in 2013.

In addition, the Company, through its University Program Office, established two university-level research centers in National Taiwan University (NTU) and National Chiao Tung University (NCTU) in 2013. Two other centers with National Cheng Kung University and National Tsing Hua University will be established in 2014. The mission of the centers is two-fold: to develop top graduate students for future employment and encourage selected academics to consolidate different research domains under one umbrella for more effective synergy. TSMC provides hundred of millions of NT dollars in seed money for leveraging funding from the National Science Council.

In 2013, the two centers in NTU and NCTU sponsored more than 50 faculty and 250 students across the fields of Electronics, Material Engineering, Physics, Chemistry, Chemical Engineering and Mechanical Engineering. These centers also help advance novel or innovative academic semiconductor research.

In order to cultivate a young talent pipeline for recruitment both locally and around the world, TSMC deploys a number of recruiting activities and university programs, including Joint Development Programs, University Shuttle Program, Summer Internship, Job Fairs in Taiwan, U.S., Singapore and India, as well as a series of Fresh Graduate Career Symposium for soon-to-be graduates.

People Development

TSMC is committed to cultivating a continuous and diversified learning environment. Under this mission, the Company initiated “TSMC Employee Training and Education Procedure” to ensure the Company’s and individuals’ development objectives can be achieved through internal and external training resources.

Based on the nature of the individual’s job, work performance and career development path, the Company provides employees a comprehensive network of learning resources, including on-the-job training, classroom training, e-learning, coaching, mentoring, and job rotation.

For each employee, a tailor-made Individual Development Plan (IDP) is provided.

The Company provides employees with a wide range of on-site general, professional, and management training programs. In addition to engaging external experts as trainers, hundreds of TSMC employees are trained as qualified instructors to deliver their valuable know-how in internal training courses. In 2013, TSMC conducted 1,549 internal training sessions, which translated to a company-wide total of nearly 890,000 training hours with the participation of over 530,000 attendees. Employees on average attended over 22 hours of training and the total training expenses reached NT$83 million.

TSMC’s training programs include:

• New Employee Training: includes basic training and job orientation for new employees. Furthermore, newcomers’ managers and the Company’s well-established Buddy System are in place to support the newcomers in their assimilation process.
• General Training: refers to training required by government regulations and/or Company policies, as well as trainings on general subjects for all employees or employees of different job functions. Such training includes subjects of industry-specific safety, workplace health and safety, quality, fab emergency response, languages, and personal effectiveness.
• Professional/Functional Training: provides technical and professional training required by different functions within the Company. TSMC offers training courses on equipment engineering, process engineering, accounting, information technology, and so forth.
• Management Training: programs are tailored to the needs of managers at all levels, including new, experienced, and senior managers; optional courses are also available.
• Direct Labor (DL) Training: enables employees of the production line in acquiring the knowledge, skills and attitudes they need to perform their jobs well and to pass the certification for operating equipment. Training includes DL Skill Training, Technician “Train-the-Trainer” Training, and Manufacturing Leader Training.

Apart from internal training resources, our employees are also subsidized when taking external short-term courses, credit courses and degrees.

Compensation

TSMC provides a diversified compensation program that is competitive externally, fair internally, and adapted locally. TSMC upholds the philosophy of sharing wealth with employees in order to attract, retain, develop, motivate and reward talented employees. With excellent operating performance, employment at TSMC entitles employees to a comprehensive compensation and benefits program above the industry average.

TSMC’s compensation program includes a monthly salary, an employee cash bonus based on quarterly business results, and employee profit sharing when the Company distributes its profit each year.

The purpose of the employee cash bonus and profit sharing programs is to reward employee contributions appropriately, to encourage employees to work consistently toward ensuring the success of TSMC, and to link employees’ interests with those of TSMC’s shareholders. The Company determines the amount of the cash bonus and profit sharing based on operating results and industry practice in the Republic of China. The amount and form of the employee cash bonus and profit sharing are determined by the Board of Directors based on the Compensation Committee’s recommendation, and the employee profit sharing is subject to shareholders’ approval at the Annual Shareholders’ Meeting. Individual awards are based on each employee’s job responsibility, contribution and performance.

In addition to providing employees of TSMC’s overseas subsidiaries with a locally competitive base salary, the Company grants annual bonuses as a part of total compensation. The annual bonuses are granted in line with local regulations, market practices, and the overall operating performance of each subsidiary, to encourage employees’ commitment and development within the Company.

Employee Satisfaction

TSMC is committed to providing quality jobs with good compensation, challenging work, and comfortable work environment for its employees, and it is dedicated to foster a dynamic and fun work environment. The Company encourages employees to maintain a healthy and well-balanced life, apart from their time spent working.

TSMC’s commitment in providing employees with a sustainable career with its continuous growth, as well as its unceasing efforts as an advocate for employees’ work-life balance, has earned it the aforementioned “Most Admired Company in Taiwan“ awarded by CommonWealth Magazine.

To enrich employees’ work experience, the Company continuously implements programs to enhance their well-being, benefit, recognition, rewards and communication. The various initiatives include the following:

Employee Benefit Programs

• Diverse employee welfare programs: including 77 hobby clubs, 52 speeches covering diverse topics (in 2013), Sports Day, and Family Day. In addition, holiday bonuses, marriage bonuses, condolence allowances and emergency subsidies are also available to cater for employees’ needs.
• Convenient on-site services: cafeterias, dry-cleaning, convenience stores, travel, banking, housing, and commuting assistance are accessible for employees in the fabs.
• Comprehensive health enhancement programs: physical care and psychological consultation services. Five free counseling sessions are offered to TSMC employees on an annual basis, with extension available depending on the individual’s needs. Other programs include weight control, medical check-up, smoking secession, exercise promotion campaign, massage service, abdominal and neck x-ray, female care, blood donation, liver disease prevention, as well as seminars to raise awareness of personal health.
• Premium Sports Center: a variety of workout facilities available to all employees and their families, as well as exercise sessions conducted by professional instructors.
• Flexible Preschool Service: the childcare service, operated to meet employees’ work schedules, is available in a total of three fabs in Hsinchu and Tainan.

Employee Recognition

TSMC sponsors various internal award programs to recognize employees’ outstanding achievement, both as a team or on the individual level. With these award programs, TSMC aims to encourage employees’ sustainable development that in turn adds to the Company’s competitive advantage.

The award programs include:

• TSMC Medal of Honor, presented exclusively by the Chairman, recognizes those who contribute to the Company’s business performance significantly.
• TSMC Academy recognizes outstanding TSMC scientists and engineers whose individual technical capabilities make significant contributions to the Company.
• Outstanding Engineer Award for each fab and Total Quality Excellence Award recognize employees’ continuous efforts in creating value for the Company.
• Service Award represents TSMC’s appreciation toward senior employees’ dedication and commitment to the Company.
• Excellent Instructor Award praises the outstanding performance and contribution of the Company’s internal instructors in training courses for employees.

In 2013, TSMC employees continued to be recognized through a host of prestigious external awards, including National Outstanding Managers Award, Outstanding Young Engineer Award, National Model Worker Award, and National Industrial Innovation Award.

Employee Communication

TSMC values two-way communication and is committed to keeping the communication channels between the management level and their subordinates, as well as among peers, open and transparent. To ensure that employees’ opinions and voices are heard, and their issues are addressed effectively, impartial submission mechanisms, including quarterly labor-management communication meetings, are in place to provide timely support. Our continuous efforts lie in reinforcing mutual and timely employee communication, based on multiple channels and platforms, which in turn fosters harmonious labor relations and creates a win-win situation for the Company and the employees. In 2013 and as of the date of this Annual Report, there had been no loss resulting from labor disputes.

A host of two-way communication channels are leveraged to maintain the unobstructed flow of information between the managers and the employees, including:

• Regular communication meetings are held for the various levels of managers and employees.
• Periodic employee satisfaction surveys are conducted, with follow-up actions based on the survey findings.
• The corporate intranet, myTSMC: the website features Chairman’s Talk, corporate messages, Executive interviews, and other activities of interest to employees.
• eSilicon Garden: the website hosting TSMC’s internal electronic publication is updated on a bi-weekly basis with inspirational content featuring outstanding teams and individuals, as well as major activities of the Company.
• Complaints regarding major management, financial, and auditing issues are handled by the following channels with high level of confidentiality:
  - The independent Audit Committee; and
  - Ombudsman system led by an appointed Vice President.
• Employee Opinion Box provides a channel for employees to express their opinions regarding their work and the overall work environment.
• Fab Caring Circle in each fab takes care of the issues related to employees’ work and personal life. In 2013, the system dedicated mainly to the direct labors (DL) of the Company won the CSR Award presented by GlobalView Magazine with its quality and effective services.

Retention

From the employee’s initial adaptation to professional and career development, TSMC works proactively to retain outstanding employees through good compensation and through an innovative, challenging and fun work environment. All these efforts contributed to a healthy turnover rate of 5.3% for 2013.

Retirement Policy

TSMC’s retirement policy is set according to the Labor Standards Act and Labor Pension Act of the Republic of China. With the Company’s sound financial system, TSMC ensures employees a solid pension contribution and payments, which encourages employees to set long-term career plans and raises their commitment to TSMC.