2015 TSMC Annual Report

• TSMC Vision, Mission & Core Values
• Letter to Shareholders
• Company Profile
  1. An Introduction to TSMC
  2. Market/Business Summary
  3. Organization
  4. Board Members
  5. Management Team
• Corporate Governance
  1. Overview
  2. Board of Directors
  3. Major Resolutions of Shareholders’ Meeting and Board Meetings
  4. Taiwan Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission
  5. Code of Ethics and Business Conduct
  6. Regulatory Compliance
  7. Internal Control System Execution Status
  8. Status of Personnel Responsible for the Company’s Financial and Business Operation
  9. Information Regarding TSMC’s Independent Auditor
  10. Material Information Management Procedure
• Capital and Shares
  1. Capital and Shares
  2. Issuance of Corporate Bonds
  3. Preferred Shares
  4. Issuance of American Depositary Shares
  5. Status of Employee Stock Option Plan
  6. Status of Employee Restricted Stock
  7. Status of New Share Issuance in Connection with Mergers and Acquisitions
  8. Financing Plans and Implementation
• Operational Highlights
  1. Business Activities
  2. Technology Leadership
  3. Manufacturing Excellence
  4. Customer Trust
  5. Employees
  6. Material Contracts
• Financial Highlights and Analysis
  1. Financial Highlights
  2. Financial Status and Operating Results
  3. Risk Management
• Corporate Social Responsibility
  1. Overview
  2. Environmental, Safety and Health (ESH) Management
  3. TSMC Education and Culture Foundation
  4. TSMC Volunteer Program
  5. TSMC i-Charity
  6. Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission
• Subsidiary Information and Other Special Notes
  1. Subsidiaries
  2. Status of TSMC Common Shares and ADRs Acquired, Disposed of, and Held by Subsidiaries
  3. Special Notes
• Financial Statements
  1. Consolidated Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report
  2. Parent Company Only Financial Statements for the Years Ended December 31, 2014 and 2013 and Independent Auditors’ Report
• Contact Information
• Downloads
• Previous Annual Reports
• CHINESE

TSMC Annual Report >  2015  >  Operational Highlights > Employees

Employees

Human Capital

Human capital is one of TSMC’s most important assets. The Company is committed to providing quality jobs with good compensation, meaningful work, and a safe work environment for its employees. Moreover, TSMC is dedicated to fostering a dynamic, enjoyable work environment. The Company’s efforts in fostering a “Great Place to Work” are highly recognized, and TSMC has received many awards.

TSMC believes that all employees should be treated with dignity and respect. The Company is committed to upholding workers’ rights and respects internationally proclaimed human rights, as outlined by the United Nations Universal Declaration on Human Rights and the International Labor Organization’s fundamental conventions on core labor standards.

At the end of 2015, TSMC and its subsidiaries had over 45,272 employees worldwide, including 4,669 managers, 19,645 professionals, 3,789 assistants, and 17,169 technicians. The following table summarized TSMC workforce at the end of February 2016:

Workforce Structure for TSMC and Its Subsidiaries

Recruitment

TSMC’s growth depends on the continued contributions of its devoted employees. In order to strengthen growth momentum, the Company is dedicated to recruiting top-notch professionals for all positions available. TSMC is an equal employment opportunity employer and operates on the principles of open-and-fair recruitment. The Company evaluates all candidates according to their qualifications as related to the requirement of each position without regard to race, gender, age, religion, nationality or political affiliation.

TSMC’s continuous growth requires constant talent sourcing and recruitment activities to support its business. The Company recruited over 3,800 employees in 2015, including over 2,700 managers, professionals, and administrative staffs, as well as over 1,100 assistants and technicians.

People Development

Employee development is an integral and critical factor for the growth of a company and should be systematic, disciplined and planned. TSMC is committed to cultivating a consistent and diverse learning environment. To this end, the Company has initiated the “TSMC Employee Training and Education Procedure” to ensure the Company’s and the individuals’ development objectives can be achieved through the integration of internal and external training resources.

Based on the nature of the individual’s job, work performance and career development path, the Individual Development Plan (IDP) is provided. At the same time, TSMC also actively develops talent and creates a high-performance work environment through development programs based on business needs. The Company provides employees a diverse network of learning resources, including on-the-job training, classroom training, e-learning, coaching, mentoring, and job rotation.

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 to be qualified instructors to deliver their valuable know-how in internal training courses.

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 newcomers in their assimilation process in both corporate culture and work requirements.
• General Training: refers to training required by government regulations and/or Company policies, as well as training on general subjects for all employees or employees of different job functions. Training topics include 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 production line employees to acquire 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.
• Customized Training: programs are tailored to the needs of the organization and/or the people development plan.

In 2015, TSMC conducted 1,337 internal training sessions, which translated to a companywide total of 770,548 training hours with the participation of 527,553 attendees. Employees on average attended over 17 hours of training with the training expenses reaching NT$85,540,407.

Apart from internal training resources, our employees are also subsidized when pursuing external short-term courses, for-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 employees’ profit sharing bonus based on annual profit.

The purpose of the employee cash bonus and employees’ profit sharing bonus 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 employees’compensation based on operating results and industry practice in the Republic of China. The amount and form of the employee cash bonus and employees’ profit sharing bonus are recommended by the Compensation Committee. In addition, the profit sharing bonus is distributed upon the approval of the Board of Directors. 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 employee commitment and development within the Company.

Employee Engagement

Taiwan’s Labor Standards Act and the fundamental convention of International Labour Organization prohibit all forms of forced or compulsory labor. TSMC stands firmly with the protocols and has never forced labor from involuntary persons or menaced them with any penalty.

The Company encourages employees to maintain a healthy and well-balanced life while achieving high efficiency and effectiveness at work. To enrich employees’ work experience, TSMC continuously implements programs to enhance their communication, well-being, benefit, recognition and rewards. The various initiatives include the following communication, benefit and recognition programs:

Employee Communication

TSMC values two-way communication and is committed to keeping communication channels between the management level, subordinates and 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. TSMC’s 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 employees.

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

• Regular communication meetings for various levels of managers and employees.
• Periodic employee satisfaction surveys, with follow-up actions based on the survey findings.
• The corporate intranet, myTSMC, an internal website featuring Chairman’s talk, corporate messages, executive interviews, and other activities of interest to employees.
• eSilicon Garden, a website hosting TSMC’s internal electronic publications providing real-time updates on major activities of the Company, as well as inspirational content featuring outstanding teams and individuals.
• Complaints regarding major management, financial, and auditing issues are handled through two channels, both with high level of confidentiality, including the independent Audit Committee and the Ombudsman system led by an appointed Vice President.
• Employee Opinion Box provides a channel for employees to express their suggestions or opinions regarding their work and the overall work environment.
• Fab Caring Circle in each fab addresses the issues related to employees’ work and personal life; the system is dedicated mainly to the Company’s direct labor workers.

Core Values are the foundation of our Company. As part of our practice on “Integrity”, we abide by the law and go above and beyond to act in accordance to the spirits of the law. With ‘commitment’, we provide employees with meaning jobs, safe working environment and competitive packages in compensation and benefits. With regards to Labor Union, TSMC respects employees’ rights entitled by global labor standards and local regulations, including UN Global Compact’s Ten Principles and Taiwan’s Labor Union Act. In addition, as a member of the Electronic Industry Citizenship Coalition (EICC), TSMC adopts the EICC Code of Conduct (http://www.tsmc.com/english/csr/eicc_membership.htm) and does not impede employees’ freedom of association. The principle and regulation above not only align with TSMC’s goal, but also provide practical standards and measurement for our implementation.

The relationship between our management level and employees has been harmonious over the years, thanks to our transparent and effective communication channels; though employees possess the right to form a labor union, no employees have pursued this avenue and issued a request to form one so far, underlying the achievement of the Company’s dedication.

In 2015 and as of the date of this Annual Report, there have been no losses resulting from labor disputes.

Employee Benefit Programs

• Convenient on-site services: cafeterias, laundry services, convenience stores, travel, banking, housing, and commuting assistance – are accessible for employees in the fabs.
• Comprehensive health enhancement and management programs: health enhancement programs include weight control, in-fab clinic and dentist services, smoking cessation, massage service, as well as seminars to raise personal health awareness. Health management programs include post health-exam follow-up activities for abnormal cases, prevention of cerebrovascular disease, ergonomic hazards management, and maternal care and protection. Employee assistance programs include five free annual counseling sessions for mental health and financial/legal issues, with extensions available depending on the individual’s needs.
• Diverse employee welfare programs: including 76 hobby clubs, 22 speeches covering various topics, Sports Day, and Family Day. In addition, holiday bonuses, marriage bonuses, condolence allowances and emergency subsidies are also available to address employees’ needs.
• 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: childcare service, operated to meet employees’ work schedules, is available in three fabs in Hsinchu and Tainan.

Employee Recognition

TSMC sponsors various internal award programs to recognize outstanding achievements by employees, both individual and as a team level. With these award programs, TSMC aims to encourage continued employee development, which in turn adds to the Company’s competitive advantage.

The award programs include:

• TSMC Medal of Honor, presented by the Chairman, recognizes those who contribute significantly to the Company’s business performance.
• 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 of 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.
• Function-wide awards dedicated to innovation, including Idea Forum, and TQE Awards, etc.

Apart from corporate-wide awards, in 2015 distinguished TSMC employees continued to be recognized through a host of prestigious external awards, including the Outstanding Engineer Award, the Outstanding Young Engineer Award, and the National Manager Excellence Award.

Retention

Continuous growth is a major component of TSMC’s commitment to its stockholders and employees, and the retention of outstanding employees is crucial in fulfilling this commitment. From employee’s initial orientation and adaptation to professional and career development, TSMC works proactively to provide employees with good compensation, innovative, meaningful and enjoyable work, as well as a safe work environment.

TSMC continues to dedicating in employee retention, the Company’s total compensation highly surpasses the average compensation among industries. Also, the Company provides surpassing leave programs for long-term retention planning. For example, Ministry of Labor announced the amendment of “Enforcement Rules of the Labor Standards Act“ in 2015: to reduce national holidays from 19 days to 12 days. TSMC remains 19-day national holidays.

In 2015, the Company recorded a healthy and manageable turnover rate of 5%.

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 deepens their commitment to TSMC.