Corporate Governance

Our corporate governance system is established under the basic philosophy of "company as a public entity of society."

Board of Directors

The Board of Directors is composed of sixteen directors, two of whom are Outside Directors. An "outside director" is defined as a director of the company who does not engage or has not engaged in the execution of business of the company or its subsidiaries as a director, and who does not serve or has not served as an executive officer, manager, or in any other capacity, as an employee of the company or its subsidiaries.

Both of two Outside Directors are appointed as those who are independent from Panasonic, do not cause the conflict of interests with shareholders of Panasonic, and also, from a neutral and objective standpoint, could enhance and strengthen the effectiveness of supervising the Directors' execution of the duties.

Auditors and Board of Corporate Auditors

The Corporate Auditors and the Board of Corporate Auditors supervise the status and operation of corporate governance, and also audit day-to-day activities of management, including the Directors' execution of the duties. The Board of Corporate Auditors is composed of five Corporate Auditors, including three Outside Corporate Auditors. An "outside corporate auditor" is defined as a corporate auditor of the company who has never been a director, accounting counselor, executive officer, manager, or in any other capacity, as an employee of the company or any of its subsidiaries prior to the appointment.

All three of Outside Corporate Auditors are appointed as those who are independent from Panasonic, do not cause the conflict of interests with shareholders of Panasonic, and also, from a neutral and objective standpoint, could enhance and strengthen the effectiveness of supervising the Directors' execution of the duties.

Under the Japanese Company Law, a company, except for a "joint stock corporation with specified committees," is not required to have any audit, nominating and compensation committees, or outside directors. Most Japanese companies, including Panasonic, appoint corporate auditors aiming for strengthening a corporate governance system. In addition, the appointment and dismissal of directors and corporate auditors are determined at a general meeting of shareholders.

Remuneration Policy for Directors and Corporate Auditors

The amounts of remuneration and bonuses of Directors are linked to individual performance based on Capital Cost Management (CCM)*, sales and CO2 emissions. By implementing these performance evaluation criteria on shareholder interests, Panasonic intends to promote continuous growth and enhance profitability on longterm basis for the Panasonic Group as a whole.
*CCM is an indicator created by Panasonic to evaluate return on capital.

Under the Company Law, the maximum amounts of remunerations, including equity compensation such as stock options, bonuses, and other financial benefits given in consideration of performance of duties (collectively, the "remunerations") of directors and corporate auditors of Japanese joint stock corporations, except for a "joint stock corporation with specified committees," must be approved at a general meeting of shareholders. Companies must also obtain the approval at a general meeting of shareholders to change such maximum amounts. Therefore, the remunerations of the directors and corporate auditors are subject to the approval of shareholders.

The maximum total amounts of remunerations for Directors and Corporate Auditors of Panasonic is therefore determined by a resolution at a general meeting of shareholders, and thus remunerations of the Directors and Corporate Auditors of Panasonic are under the oversight of shareholders. The remuneration amount for each Director is determined by Panasonic's Representative Directors who are delegated to make such determination by the Board of Directors, and the amount of remuneration for each Corporate Auditor is determined upon discussions amongst the Corporate Auditors.

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