All the below policies apply to Tower Semiconductor Ltd. and its subsidiaries, with respect to all businesses, countries, and regions (collectively the “Company” or “TS Group”).
Corporate Governance Structure
Tower Semiconductor has established a clear corporate governance structure by appointing a Board of Directors that oversees the Company’s formulation of business plan and strategy, goals and objectives, and provides guidance to the Company’s Executive Management.
The board’s responsibilities include: stewardship and trusteeship on behalf of stakeholders, regularly scanning the external operating environment, monitoring Company performance, ensuring the Company has appropriate corporate governance structures in place, approval of executive and director compensation and related party transactions in accordance with applicable law, monitoring Company compliance with relevant legislation and internal policies, assessing risks facing the Company, overseeing a risk management plan and monitoring compliance therewith.
The Board of Directors has made a determination of independence under the Nasdaq Listing Rules with respect to all Board members, excluding the CEO and Chairman.
Board members are expected to attend all Board meetings as well as all committee meetings on which they serve.
Both the Board of Directors and Executive Management are gender inclusive with at least 20% of both groups being female.
Board Diversity Matrix:
The Board of Directors assigns certain responsibilities to its Board committees (Audit Committee, Compensation Committee and Nomination Committee) that report regularly to the board on matters they have examined to allow for effective functioning of the Board. Each such Committee consists of at least three directors and all members of the Committees are Non-Executive Directors.
The Audit Committee’s responsibilities include: appointing the Company’s independent auditor, setting the independent auditor’s compensation, conducting meetings with CEO and CFO, the independent auditor, and any other committee of the board as appropriate, prior to the filing of the annual and quarterly reports including the audited financial statements and other financial information, reviewing and advising on the selection and removal of the internal auditor and overseeing the performance of the Company’s internal audit plan, including risk of fraud, and discussing the steps management has taken to monitor and control risks and exposures, including through cybersecurity, information security and privacy programs.
The Compensation Committee’s responsibilities include recommending to the Board the corporate compensation policy for directors and officers, in accordance with the requirements of the Companies Law; and recommending to the Board an update of the compensation policy from time to time and examining its implementation.
The Nomination Committee’s responsibilities include: identification of individuals qualified to become be appointed as Board members; (ii) to recommendation to the Board director nominees for approval by the Board and shareholders; and (iii) performing director and board periodic assessment and make recommendations to the board with respect to renomination and refreshment of board membership; (iv) to assisting the Board in establishing and reviewing the Company’s statement of corporate governance principles and promoting good corporate governance in the Company; (v) to assisting the Board in carrying out its responsibilities, related to CEO succession planning; and (v) overseeing the Company’s commitment to social and environmental responsibility matters, and to advise the Board on such matters.
The Board of Directors includes experts in the areas of semiconductor, technology, manufacturing, business and finance. The size, structure, and composition of the Board is subject to continual evaluation. The recommendations and decisions with respect to appointment of board members are formulated after comprehensive review in order to ensure that the Board has the appropriate skills, knowledge and experience to operate effectively and oversee the Company’s strategy. To this end, the Board has discussed and evaluated the skills currently present within the boardroom to identify skills that the Board may benefit from further as well as determine any gaps in skills or competencies that could be addressed in future director appointments. The Nomination Committee is responsible for ensuring that appointment processes are formal, rigorous and, transparent. The Directors’ appointment and their compensation are approved annually by the shareholders.
During 2020 the Board of Directors and committees’ meetings were attended by all members.
Tower is committed to transparency to its shareholders in all aspects of its corporate governance, in keeping with its status as a company whose shares are registered under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), and listed on the Nasdaq Global Capital Market. Tower seeks to implement that commitment by way of its public disclosures, including press releases and reports filed with the U.S. Securities and Exchange Commission. Notwithstanding our status as a “foreign private issuer” under the Exchange Act, we at Tower have agreed, commencing with our 2022 annual general meeting of shareholders, to voluntarily enhance the information that we provide in our annual report on Form 20-F concerning the results of the voting on proposals at our annual and special shareholder meetings.
The Company has appointed Brightman & Almagor & Co. (a member of Deloitte Touche Tohmatsu International) as the Company’s external financial auditor. Deloitte have been appointed as the external auditor for the past 28 years. The appointment is reviewed and evaluated by the Audit Committee, prior to the appointment being accepted and confirmed by the shareholders. Tower’s Chairman of the Board, Directors, Chief Executive Officer, Chief Financial Officer, managers and executives in charge of the Company’s finance and accounting operations did not hold any positions within Tower’s independent audit firm or its affiliates in the most recent year.
Reporting Violations, Monitoring and Enforcement Policy
Employees, suppliers, customers and other business are encouraged to promptly report any illegal, inappropriate, illegitimate behavior of Company personnel, suppliers and other business partners, and any other violation to the Company’s code of ethics and other corporate policies, whether such has occurred or may occur, and convey concerns, complaints or questions regarding thereto. Such reports may be communicated (1) to the employee’s direct manager, indirect manager, HR Business Partner or the Compliance Officer as defined in the Company’s code of ethics, orally or in writing; or (2) anonymously through the link “Anonymous report to management” in the internal corporate website (same link is available in the Company site for outside service providers). When applicable, employees may directly report to the Audit Committee of the Board of Directors, as specified in the Company’s Complaints Management Procedure.
Supervisors and managers receiving any such report shall forward the report and all relevant information in his/her possession to the HR Business Partner or the Compliance Officer. The HR Business Partner and/or Compliance Officer shall review the complaint and will work with relevant VP to investigate the event.
In the event that the report pertains to the behavior of, or practices conducted by, the Compliance Officer, such report shall be forwarded to the Senior Vice President of Human Resources.
Upon receipt of any such report, the HR Business Partner, Compliance Officer or the Vice President of Human Resources, as the case may be, shall act according to the Company’s Complaints Management Procedure.
Such reports and all relevant information shall be held in confidence, subject to applicable laws, regulations and legal proceedings.
It shall be unlawful for the Company, any of its managers or employees or any person acting on their behalf, to discharge, act revengeful, harass or otherwise discriminate against employees who provide evidence of said improper behavior that has occurred or may occur, or against employees who submit or express their intention to submit such complaints or assist in the investigation thereof.
In order to ensure compliance with corporate codes and policies, the Company has a learning system that monitors the assignment and completion of training programs and exams for all employees. Specific courses are mandatory for all employees on an annual basis such as safety, code of ethics, code of conduct, sexual harassment prevention and anti-corruption. A passing grade in all courses is mandatory.
In addition, certain functions, including sales, business unit management and customer solutions, receive annual in person training by the Corporate Compliance Officer on topics including sales process, export control and sanctions, commercial terms and conditions, and confidentiality.