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FOR IMMEDIATE RELEASE Media Contacts: Akira Kadota / Wilson Solano International PR, Tokyo (Tel: 03-3578-1237, Fax: 03-5472-7608)
Matsushita Announces New Group Management System
Matsushita Electric Industrial Co., Ltd. (MEI [NYSE and PCX symbol: MC]), best known for its "Panasonic" brand products, today announced that it will implement a new Group management system, while also strengthening its corporate governance structure.
Following business and organizational restructuring that took effect beginning from January 2003, MEI has introduced various Group management reforms, such as the implementation of autonomous management in each business domain, and the introduction, at all business domain companies, of a global consolidated management system and new evaluation standards for business results.
Over the years, MEI has also been proactive in strengthening its corporate governance, in line with its basic philosophy of contributing to society as a "public entity." As such, MEI was one of the first Japanese companies to include Outside Directors in its Board of Directors, and also established an Advisory Board.
With the start of autonomous management at each of the Matsushita Group's business domain companies in the current fiscal year, MEI will implement the following initiatives to expedite optimum management operations under the new Groupwide business and organizational structure.
- Introduction of a new Group management system tailored to the Company's new organizational structure.
- Establishment of MEI-specific corporate governance system.
- Placement of greater emphasis on business results as evaluation standards, in the interest of shareholders. (the remuneration system for Directors and Executive Officers will be revised, linking compensation to capital cost management (CCM) and cash flows results.)
1. Introduction of an Executive Officer System Tailored to Groupwide Domain-based Management
Under the Group's new operational structure, MEI will empower each of the business domain companies by delegating authority in order to realize autonomous management. At the same time, from the viewpoint of Groupwide corporate strategy, an Executive Officer System will be introduced to integrate the comprehensive strengths of all Group companies in Japan and overseas, as outlined below:
- From among the senior management at the Group's main business units,
Executive Officers will be elected, each to assume responsibility as
the Group's executive regarding execution of business.
Executive Officers will be given such titles as Senior Managing Executive Officer, Managing Executive Officer and Executive Officer, depending on the extent of responsibility and achievement of each individual.
- The Board of Directors of MEI will elect Executive Officers based on each candidate's achievements, abilities and caliber. Candidates will be chosen mainly from the senior management of business domain companies, such as internal divisional companies and subsidiaries, as well as from management personnel responsible for overseas subsidiaries and certain senior corporate staff who guide the direction of the Group pertaining to important business matters.
- To make clear the execution responsibility for each Executive Officer, the term of office will be one year.
- Executive Officers will be equal, in terms of rank and status, to members of the Board of Directors.
- The Managing Directors Meeting, an organization for consulting on corporate strategy issues, is currently comprised of only MEI Managing Directors and above. This will be reorganized, however, to include MEI Managing Directors and above, as well as Managing Executive Officers and above. This new meeting will be called the Group Managing Directors & Officers Meeting, with participation by top management from each major business domain company.
2. Establishment of MEI-specific Corporate Governance System
In line with the domain-based autonomous management structure, MEI will realign the role and structure of its Board of Directors to enable swift and strategic decision-making, as well as optimum monitoring, on Groupwide matters.
- Upon delegating authority for business operations to Executive Officers, the Board of Directors of MEI will focus mainly on deciding corporate strategies and monitoring and supervising business domain companies, based on the new business performance evaluation standards, from an investor's point of view. This will clarify the supervisory responsibilities held by the Board of Directors, and the responsibilities for execution of business held by Executive Officers.
- However, given the diversified scope of MEI's business fields, the
Company does not intend to completely isolate supervisory functions
from execution functions, so that it may continue optimum decision-making
and supervision based on actual situations and developments at operational
fronts. Therefore, MEI will not change its policy of having management
personnel, who are well-versed in day-to-day operations at operational
fronts, participate in Board of Director meetings.
To this end, the Board of Directors of MEI will be balanced in terms of the backgrounds of its members. MEI will choose persons with backgrounds in different areas, such as corporate strategy, management of domain companies critical to corporate strategy, and supervision related to general business matters. Outside Directors will continue to be included in the Board of Directors. Furthermore, members of the Board of Directors will be reduced in number.
- The terms of office for members of the Board of Directors will be shortened to one year, compared to the current two years, in order to clarify their responsibilities as Director, and allow for a dynamic Board of Directors organization.
- Representative Directors will be limited to Senior Managing Directors and above, thereby reducing the number of Directors with representative authority. (Currently, Representative Directors consist of Managing Directors and above.)
3. New Remuneration System for Directors and Executive Officers
Members of the Board of Directors and Executive Officers, being equal in rank and status, will be evaluated based on the same criteria, specifically CCM and cash flows, the results of which will directly affect their compensation.
This new remuneration system is intended to achieve continuous growth and enhanced profitability on a long-term basis for the Group as a whole, while increasing shareholder value.
Furthermore, since the new system accomplishes the goal of increasing corporate value in the interest of shareholders, stock options for Directors and senior executives will be discontinued.
4. Strengthening of the Corporate Auditor System
MEI will further strengthen its corporate auditor system, pursuant to amendments to the Japanese Commercial Code regarding corporate auditors, which took effect in May 2002.
Specifically, to strengthen auditing functions at business domain companies,
MEI will implement initiatives including the placing of full-time Senior
Auditors at MEI internal divisional companies, and the establishment of
a Group Auditors Meeting to
promote collaboration with subsidiaries' corporate auditors.
5. Effective Date
The aforementioned changes will be implemented after the 96th Ordinary General Meeting of Shareholders of MEI, to be held in late June.
Disclaimer Regarding Forward-Looking Statements
This press release includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934) about Matsushita and its group companies (the Matsushita Group). To the extent that statements in this press release do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Matsushita Group in light of the information currently available to them, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Matsushita Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Matsushita undertakes no obligation to publicly update any forward-looking statements after the date of this press release. Investors are advised to consult any further disclosures by Matsushita in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, Asian currencies and other currencies in which the Matsushita Group operates businesses, or in which assets and liabilities of the Matsushita Group are denominated; the ability of the Matsushita Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the ability of the Matsushita Group to realize expected benefits of various restructuring activities in its business and organization; the ability of the Matsushita Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Matsushita Group to maintain competitive strength in many product and geographical areas; current and potential, direct and indirect trade restrictions imposed by other countries; and fluctuations in market prices of securities and other assets in which the Matsushita Group has holdings; as well as future changes or revisions to accounting policies or accounting rules.