Corporate Governance

The Company believes it is important to increase corporate value by fulfilling accountability through dialogue with various stakeholders such as shareholders and customers, making effort to execute transparent business activities, and swiftly conducting business activities with fairness and honesty based on its management philosophy of “a company is a public entity of society.” For this reason, we recognize that corporate governance is an important foundation of management. The fundamental structure is an audit and supervisory system consisting of the Board of Directors that decides the execution of strategies and important matters related to the overall Group and supervises the execution of Director duties, and the Audit & Supervisory Board Members and Audit & Supervisory Board which supervises the execution of Director duties. The entire Panasonic Group endeavors to establish and strengthen this structure as an effective system.

The Company conducts the following activities to enhance effectiveness of its corporate governance.

1. Secures the rights and equal treatment of shareholders.
2. Endeavors to appropriately cooperate with stakeholders such as employees, customers, business partners and local societies with the recognition that its sustainable growth is brought about as a result of receiving resources and contributions from such stakeholders.
3. Appropriately discloses corporate information and ensure transparency of the management.
4. Given its fiduciary responsibility and accountability to shareholders, the Board of Directors set the broad direction of corporate strategy, establish an environment where appropriate risk-taking is supported and carry out effective oversight of Directors and management from an independent and objective standpoint.
5. Engages in constructive dialogue with shareholders in order to contribute to the sustainable growth and the increase of corporate value over the mid- to long-term.

The Company has transformed into an Operating Company Structure (Holding Company Structure) in April 2022. The Operating Companies are “(1)Panasonic Corporation” (it is composed of multiple business areas and unites the following five divisional companies: China & Northeast Asia Company, Living Appliances and Solutions Company, Heating & Ventilation A/C Company, Cold Chain Solutions Company, and Electric Works Company), “(2) Panasonic Automotive Systems Co., Ltd.”, “(3) Panasonic Connect Co., Ltd.”, “(4) Panasonic Industry Co., Ltd.”, “(5) Panasonic Energy Co., Ltd.”, “(6) Panasonic Housing Solutions Co., Ltd.”, and “(7) Panasonic Entertainment & Communication Co., Ltd.”. They facilitate the evolution and change of business in each area and carry out autonomous management on development, manufacturing, and sales as well as management of profits and fund for the realization of growth strategies.​

The Company has responsibility for the management and engineering strategies across the Group. Specifically, the Company formulates the mid/long-term group strategies for the enhancement of corporate value, contributes to the businesses with innovative technology and production technology, and supports for engineering development and manufacturing. In addition, (8) Panasonic Operational Excellence Co., Ltd. has been established to play a role as a platform for improving the efficiency and sophistication of operations across the Group. Panasonic Operational Excellence Co., Ltd. assumes as a function of the group-wide management control in terms of developing the Company-wide rules, infrastructure and systems, implementing internal audit, internal control and compliance activities required to the listed company and the legal entity, and responding to the stakeholders closely working with the Company.

The Board of Directors entrusts authority to the Operating Companies, and achieves a fast-moving decisionmaking process centered on the Operating Companies. It also decides the Group’s mid- to long-term strategies and important Group matters, and concentrates on Group direction through Group governance and risk management, in order to make important decisions for the Group and conduct sound and suitable monitoring. The term of each Director is limited to one (1) year and all Directors are reelected at an annual general meeting of shareholders. The structure of the Board of Directors makes it possible to appropriately apply decisions of shareholders to management. The Board of Directors is composed of thirteen (13) Directors (of which two (2) are women). With consideration for the skills required by the Panasonic Board of Directors, it seeks to ensure diversity of the knowledge, experience, and qualifications of the Board of Directors as a whole. Based on a policy of ensuring that one-third or more of Board of Directors Members are Outside Directors who can be expected to provide valuable opinions for decisions related to operations and supervision of Director duties based on their extensive careers outside the Company and high levels of knowledge, six (6) Outside Directors have been appointed. Chairman of the Board who is not involved in execution of business takes on the position of a chairman.
In the Company, authorities are significantly delegated to the Operating Companies for the complete autonomous management. Also, in order to maximize the Group value, the Company has adopted the Executive Officer system, which allows group management from the standpoint of total optimization.
The number of Executive Officers (including those who concurrently serve as Directors) is thirteen (13), consisting of President, Executive Vice President, a position in which the executive officer acts as President in specific areas, and Executive Officer, a position responsible for the business execution of specific functions.
Board of Directors meetings were held total of the twelve (12) during fiscal 2024, and each meeting took three (3) hours and thirty-eight (38) minutes.
The attendance of each Director and each Audit & Supervisory Board Members (A&SB Members) is as follows.

At the Board of Directors meeting in fiscal 2024, the following items were mainly discussed. At Board of Directors’ meetings in fiscal 2024, focused discussion was held concerning the following matters. Much time was allocated to discussing business strategies and functional strategies, and the Board exercised its supervisory functions.

<Matters Resolved>

• Group mid-to long-term strategy
• Investment in a new automotive battery plant in the U.S. state of Kansas
• Partnership between Panasonic Automotive Systems Co., Ltd. and Apollo Global Management, Inc., etc.

<Matters Reported>

• Studies of target conditions for the group and areas of contribution, as well as business portfolio management for achieving them
• Status for study of Group CEO succession plan
• Group financial strategy
• Human resources strategy
• Measures for risk management
• Measures for Group compliance
• PX (Panasonic Transformation)
• Technology strategy, intellectual property strategy
• Cyber security measures
• Initiatives for and issues with disclosure of non-financial information (sustainability)
• Significance of ownership of cross-shareholdings, etc.

In addition to the above, reports of duty execution were received from Directors concurrently serving as Executive Officers, and reports of operating company strategies were received from the Presidents of Operating Companies.

(Note) PX (Panasonic Transformation): This is an initiative spanning the Panasonic Group, centering on DX (Digital Transformation). It is carried out as an important strategy for strengthening the business foundation, and is not limited to IT system improvements.

In order to contribute to “the sound and sustainable growth” and “improvement in mid- to long-term corporate value of the Group”, the A&SB is responsible for a part of corporate governance as an independent agency contracted by the shareholders in order to “establish a high-quality corporate governance system” and ensure sound management and trust from society. The A&SB is composed of five (5) members (of which one (1) is a woman). Two (2) of these members are Senior A&SB Members (full-time) who were selected from executive directors or equivalent positions and who are highly familiar with company operations, and are capable of visiting actual worksites and exercising investigative authority to understand the actual conditions of operations. Of these, one (1) has considerable knowledge related to financial and accounting matters. Three (3) Outside A&SB Members have been appointed, consisting of a business manager, lawyer, and certified public accountant who are capable of effectively supervising the execution of Director duties based on their advanced expertise, extensive careers, and high levels of knowledge. Based on audit policies and plans the A&SB developed, the A&SB has received reports from management (seventeen (17) reports in fiscal 2024) to confirm the status of execution of duties. The A&SB has also received reports on the results of audits conducted by Senior A&SB Members of the Company and other activities, and shared the results of on-site inspections, compliance issues, and the status of sustainability efforts. The A&SB inspected the records of approval of important decisions, checked the contents of reports made to the Audit Report System and responses to the reports, and confirmed the contents of non-assurance services of accounting auditors. At the end of each quarter and fiscal year, the A&SB checks the Company’s financial results and report documentations on the reviews and the audits conducted by accounting auditors, and compiles an Audit Report as the A&SB, evaluates the accounting auditors, determines re-election or non-reelection of each of the accounting auditors, and confirms compliance with law and regulations regarding the agendas of the General Meeting of Shareholders.
The A&SB held total of the thirteen (13) A&SB meetings for the fiscal year ended March 31, 2024, and each meeting took three (3) hours and sixteen (16) minutes. The attendance rate was 100% (Senior A&SB Members: 100%, Outside A&SB Members: 100%).
The attendance rate of each A&SB Members at the A&SB meetings is as follows.

The Company has established a voluntary Nomination and Compensation Advisory Committee. Upon receiving inquiries from the Board of Directors, the Committee deliberates on the results of internal reviews regarding the nomination of candidates for Director, A&SB Member, Executive Officer, President of the operating companies, and Outside Director of the operating companies, and also on the appropriateness of the remuneration system for Directors, Executive Officers, Presidents of the operating companies, and Outside Directors of the operating companies, and of the amount and content of remuneration for each individual. In addition, the Committee discusses the succession plan for the Group CEO, Executive Officers, and Presidents of the operating companies, and conducts monitoring of successor candidates.
The Committee members can suggest when the Group CEO should be replaced.
The Committee is composed of five (5) members, Outside Director Michitaka Sawada (chairperson), Outside Director Shinobu Matsui, Outside Director Kazuhiko Toyama, Chairperson of the Board Kazuhiro Tsuga, and Representative Director, President Yuki Kusumi. The Company has enhanced the objectivity and transparency of the Committee, by ensuring that it is chaired by an Outside Director and that Outside Directors constitute a majority of its membership.
This Committee met five (5) times in fiscal 2024, and the attendance of each Committee is as follows.

At the Committee meeting in fiscal 2024, the following items were mainly discussed.

• Succession plans for the Group CEO
• Successor candidates for the Group CEO, Executive Officers, and Presidents of operating companies
• Results from internal consideration of Director and other candidates
• Standard guidelines for dismissal or declining to reappoint a Director, Executive Officer, or President of an operating company
• Remuneration system, for Directors, Executive Officers, Presidents of operating companies, and Outside Directors of operating companies, etc.

The contents of discussions by this Committee regarding the Group CEO succession plan, and the standards for dismissal or declining to reappoint a Director, Executive Officer, or President of an operating company, are reported to the Board of Directors.

The Group Management Meeting and the PHD Strategy Meeting are held to discuss, set the direction, and report on the Group’s mid-to long-term strategies, important Group-wide projects and committees, and important Group-wide initiatives implemented by the Company and the Operating Companies.
The Group Management Meeting is held basically once a month, chaired by the Group CEO. It consists of approximately twenty (20) senior managements including the presidents of the Operating Companies and functional directors.
The PHD Strategy Meeting is held basically at least two times a month chaired by the Group CEO. It consists of approximately ten (10) senior managements including functional directors of Human Resources, Accounting, and Legal Affairs.

The Company conducts an annual survey to evaluate the effectiveness of the Board of Directors to all the Board members who attend the Board of Directors meetings. The results are reported at the Board of Directors meetings as one of the agenda items, and issues and improvement measures raised by the members of the Board of Directors are discussed. Based on the results of these discussions, the Company continuously builds up a PDCA cycle by considering and implementing measures to improve the structure and operation of the Board of Directors, leading to improvement of the effectiveness of the Board of Directors and strengthening of governance. Following the conclusion of a Board of Directors’ meeting, a review of the Board of Directors’ meeting is carried out as needed centering on the Outside Directors and Outside Audit & Supervisory Board Members, and efforts are made to improve the operation of Board of Directors’ meetings.

i) Important fiscal 2024 measures based on the effectiveness evaluation in the previous fiscal year
The following are the primary measures that were carried out in fiscal 2024.

• Ensuring sufficient time and expand discussion of Group mid- to long-term strategies and business portfolios
• For agenda item of operating company mid- to long-term strategies and important matters, clearly identifying the division of roles between the Company’s Board of Directors as the holding company and the Company’s execution side and operating company Board of Directors, and narrowing down the list of resolutions which should be supervised and monitored by the Company’s Board of Directors
• Enhancing sharing of the activity contents and policies between the Board of Directors and the Nomination and Compensation Advisory Committee to strengthen supervision of nomination and remuneration jointly by the Board of Directors and the Committee and ensure its transparency

ii) Fiscal 2024 evaluation of the Board of Directors effectiveness
In fiscal 2024, an evaluation of the Board of Directors effectiveness was carried out on the following schedule by means of a questionnaire survey and discussion at the Board of Directors’ meetings. Advice is received from an outside agency approximately once every three years. However, during fiscal 2024, the series of processes comprising the establishment of survey questions, tabulation of results, setting of discussions at Board of Directors’ meetings, and setting the operating policy for fiscal 2025 Board of Directors operations were all conducted independently by the Company. At a Board of Directors’ meeting, based on the delivered evaluation results, the members of the Board of Directors including Audit & Supervisory Board Members reconfirmed the functions of the Board of Directors and their own roles within the Board of Directors, shared an understanding of the issues, and conducted free and open discussion of measures for improvement.

• Survey period: Late December 2023 - Mid January 2024
• Survey subjects: Directors, Audit & Supervisory Board Members, Executive Officers in attendance (Only the free answer sections from Executive Officers in attendance are included in the tabulated results.)
• Survey format: Total 32 questions (Of these, 23 were evaluations in four ranks, one was a multiple-choice question (free answer spaces were provided for each question), and eight were free answer types.)
• Primary survey items:
  (1)Operation of the Board of Directors
  (Setting of issues for discussion, structure of discussions, execution of expected functions by individual members, etc.)
  (2)Group strategies and operating company strategies
  (Management with awareness of capital cost, business portfolio, etc.)
  (3)Corporate ethics and risk management
  (Culture of compliance with corporate ethics, construction of internal controls and risk management system)
  (4)Evaluation of the management team (nomination, remuneration)
  (Reporting of contents discussed by the Nomination and Compensation Advisory Committee, appointment of Directors based on the required skills, etc.)
  (5)Dialogue and other communication with shareholders etc.
  (Sharing information related to dialogue with shareholders etc., use of dialogue with shareholders etc. to improve corporate value)
  (6)Target conditions which the Board of Directors aims for over the medium- to long-term

• Reporting and discussion of survey results at the Board of Directors: Conducted two times
  (1)Board of Directors’ meeting in January 2024
  Sharing of issues identified from the survey results, exchange of opinions concerning the related issues, and discussion of measures for improving operations
  (2)Board of Directors’ meeting in April 2024
  Discussion of the Board of Directors operation policy for fiscal 2025

iii) Board of Directors effectiveness evaluation results and issue improvement measures
The fiscal 2024 effectiveness evaluation confirmed that, continuing from fiscal 2023, the effectiveness of the Company’s Board of Directors has been generally ensured. Discussions have been held at the Board of Directors’ meeting to address the identified issues, and following proposals have been made for the fiscal 2025 in order to enhance the corporate value of Panasonic Group:

• Continue to enhance discussions towards the formulation of a new mid-to long-term Group strategy.
• Report and Discuss on the group strategy and portfolio management, in consideration of the capital profitability of each business and resource reallocation at the group level.
• Place emphasis on monitoring business within the Group’s priority investment areas.
• Report on important cross-functional agendas (such as AI, data utilization strategy, and sustainability) with the aim of possessing organizational capabilities that the group should strive for in the mid-to long term.
• Continue discussions on group financial strategy, human resources strategy, and technology strategy, among others. In fiscal 2025, based on the above improvement measures which were discussed and concluded by the Board of Directors, we will continue working to improve the Board of Directors effectiveness.

In fiscal 2024, based on the above improvement measures which were discussed and concluded by the Board of Directors, we will continue working to improve the Board of Directors effectiveness.

Duties of the Company’s Audit & Supervisory Board Members (A&SB Members) included attendance at Board of Directors Meetings, monitoring the status of supervising execution of Director duties, and stating opinions when recognized as necessary. In addition, the decision-making process for important Group matters and the conditions of discussion at important meetings were checked, and the status of execution of duties by the President and Chief Executive Officer, Presidents of the operating companies, and functional top management was monitored. A&SB Members participated in the quarterly ERM Committee meeting, and attended as observers at the quarterly Internal Audit Committee meeting which is the controlling institution for internal audit functions. The results of audits and other information were reported to the A&SB by the internal auditing group, and the A&SB Members, internal auditing group, and Accounting Auditors all met together to exchange information on matters such as risk assessments and plans for visits at the start of the year, as well as changes in the audit contents, identified items, and risk assessments, and engaged in other audit and supervisory activities intended to strengthen Group governance. At the A&SB meetings, based on the system of independent action, A&SB Members who have different expertise and knowledge openly discuss the contents of the above audit and supervisory activities, and form opinions and other information to be delivered to the Board of Directors and executive divisions. In order to continually improve the effectiveness of audit and supervisory activities, the A&SB conducts an evaluation of A&SB effectiveness at the end of each fiscal year. In addition to a quantitative evaluation of effectiveness based on a total of 40 evaluation items from perspectives such as action based on Corporate Governance Code, the effectiveness evaluation identified specific issues proposed by each A&SB Member, and worked to identify items for improvement. Issues and improvements proposed by A&SB Members are discussed and the action to be taken is decided. The results are applied to the Audit Plan for the following fiscal year. In fiscal 2024, the matters for discussion by the A&SB were submitted in advance to the President and Chief Executive Officer, Presidents of operating companies, and others in order to ensure sufficient Q&A time and expand the discussions. Outside A&SB Members accompany visiting audits by the A&SB Members, supervising the audit execution conditions from a diverse range of perspectives, and in other ways implement improvement measures and work to improve the effectiveness of the A&SB. The A&SB discussed the results of the effectiveness evaluation that was conducted at the end of fiscal 2024 and concluded that "it is functioning effectively." For issues and other matters which were identified at discussions, measures in response will be decided and continual efforts will be made to improve the effectiveness of the A&SB.

Prior to the transition to an operating company structure in April 2022, the Company carried out a number of discussions concerning the Company's corporate governance structure.
Under the Operating Company structure, a full-fledged autonomous management is implemented by the Operating Companies that have gained substantial delegation of authority for investments, etc. As a holding company, the Company's role is to determine the Group’s mid-to long-term strategies and important Group matters, and, concentrates on Group direction through Group governance and risk management, in order to make important decisions for the Group and conduct sound and suitable monitoring. As a result of the study, the Company has determined that it has been able to ensure the effectiveness of corporate governance by having an independent A&SB establish and operate the Group internal audit system in cooperation with the Internal Audit Division, and by having a voluntary Nomination and Compensation Advisory Committee chaired by an independent outside director, with a majority of independent outside directors, deliberate on executive personnel matter and remuneration. The Company has determined that the corporate governance that it aims to achieve under the Operating Company structure can be achieved without changing the conventional corporate governance structure and maintaining the system of a company with A&SB Members. For that reason, the Company has established the corporate governance structure, based on the A&SB System composed of the Board of Directors and A&SB Member / A&SB, holding the following elements.

Under its basic philosophy, "A company is a public entity of society," the Company has committed to highly transparent business activities and endeavored to be accountable its accountability to its stakeholders. The Company's specific approach to information disclosure is set forth in the “Panasonic Group Compliance Code of Conduct”, which embodies the Management Philosophy and sets forth specific items to be fulfilled in conducting business activities while practicing compliance. The basic policy on information disclosure, together with practical standards, methods and internal systems, are published in the “Disclosure Policy” on the Company’s website.

In accordance with this basic policy, important matters concerning the management of the Group are resolved or reported at the Board of Directors pursuant to the Rules of Meetings of the Board of Directors. These important matters and other matters, which are required to be disclosed under relevant laws and ordinances in Japan and overseas or any other regulations, are timely and accurately reported from each relevant department, that has the important internal information, to the department that handles relevant information under the monitoring of Group CFO, so that important information is gathered. Further, matters required to be disclosed under the rules of financial instruments exchanges are also under the monitoring of the Group CFO.

Also, if any of the matters which is required to be disclosed under relevant laws and ordinances in Japan and overseas, and the rules of financial instruments exchanges or any other regulations, occurs at the Company’s subsidiaries including the Operating Companies, such matter shall be immediately reported to the "IR Section, Corporate Finance, Accounting & IR Department" or the "Financial & Accounting Center" of Panasonic Operational Excellence Co., Ltd., depending upon the nature thereof; Thus, the Company has established a structure whereby these matters can be collected.

With respect to the information gathered or identified, the Company determines the necessity of disclosure thereof in accordance with relevant laws and ordinances in Japan and overseas, and the rules of financial instruments exchanges or any other regulations, and makes effort to disclose it at the time that the organization, which effectively decides execution of the business of the Company, makes a resolution or determination, or becomes aware of its occurrence.

In addition, the Company endeavors to confirm the contents and expressions of the disclosure with the relevant departments within the Company and outside legal counsel to ensure the accuracy, fairness and adequacy of the disclosure.

Moreover, the Company has established disclosure control procedures in order to comply with relevant laws and ordinances in Japan and overseas, the rules of financial instruments exchanges and any other regulations, and to implement the fair, accurate and timely disclosure of information about its Group, etc. In the process of preparation and confirmation of documents such as annual securities reports, the Disclosure Committee, which is comprised of managers from principal departments that handle relevant information, confirms and approves the validity of the content of the descriptions and the appropriateness of the procedures concerning the disclosure under the supervision of the Group CEO and the Group CFO, who are responsible for establishing, maintaining and ensuring the effectiveness of the internal control and disclosure control of the Company. The chairperson of the Disclosure Committee is appointed by the Group CEO and the Group CFO, and the members of the Disclosure Committee are appointed by the chairperson of the Disclosure Committee. The Disclosure Committee also develops, maintains, improves and evaluates the internal control procedures concerning disclosure matters.

The Company has documented the actual status of its internal control system, with integrated control provided by the Internal Control Promotion Office of Panasonic Operational Excellence Co., Ltd., in order to ensure reliability in the financial reporting of the Panasonic Group including its subsidiaries, ranging from the control infrastructure to actual internal control activities. Specifically, the Company has reinforced its internal controls by implementing self-checks and self-assessment programs at each of the Operating Companies. Then, Internal Auditing Managers of the Operating Companies appointed by the Company at each of the Operating Companies conduct audits. Based on the audits, the Internal Control Promotion Office supervises the group-wide internal control audits in order to confirm the effectiveness of each company’s financial reporting. With the aim of further enhancing the Group’s internal control system, in fiscal 2024 Panasonic had approximately 380 personnel assigned to conduct internal audits in the Internal Auditing Group.

Please refer to the "Corporate Governance Report" for the latest compliance with the Corporate Governance Code, the basic policy of the internal control system, and more.