Panasonic Holdings Corporation

Overview of structure

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 Connect Co., Ltd.”, “(3) Panasonic Industry Co., Ltd.”, “(4) Panasonic Energy Co., Ltd.”, “(5) Panasonic Housing Solutions Co., Ltd.”, and “(6) 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, (7) 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.

Background of 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. 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.

Corporate Governance Structure

Corporate governance structure of Panasonic Holdings (PHD). The shareholders' meeting has the authority to appoint and dismiss Directors and Audit & Supervisory Board Members, and determine the upper limit of their compensation. It also has the authority to appoint and dismiss Accounting Auditors. Under the General Meeting of Shareholders, there is Audit & Supervisory Board Members and Audit & Supervisory Board, which conducts audits, and a Board of Directors, which oversees and makes decisions on business execution, and a Voluntary Nomination and Compensation Advisory Committee, which serves as an advisory body to the Board of Directors. The Audit & Supervisory Board and the Audit & Supervisory Board Member audit the PHD Board of Directors and the PHD Executive side, working with the Accounting Auditors and the Internal Audit Committee, and the Audit & Supervisory Officers of operating companies and other group companies. The Internal Audit Committee oversees the Internal Audit Division established on the executive side and receives reports from the Internal Audit Division. The Internal Audit Division audits Group CxO. Group CxO conducts Governance, Group Strategy, Business support by functional axis of Accounting & Finance, HR, Legal affairs etc. The Board of Directors makes decisions and oversees the execution of PHD operations. On the executive side, the Group CEO is at the top and oversees the Internal Audit Committee, Group CxO, and the Group Management Committee and PHD Strategy Committee.The Board of Directors makes decisions and supervises the execution of PHD operations, and on the execution side, the Group CEO leads the internal audit committee, Group CxO, and the Group Management Committee and PHD Strategy Committee. The Group CxO reports to the Group Management Committee and PHD Strategy Committee. In addition, the Sustainability Management Committee and the PHD Enterprise Risk Management Committee report to the Group Management Committee, PHD Strategy Committee and Group CxO. The Group Management Committee and PHD Strategy Committee discuss, direct and report on the Group's medium- to long-term strategy, important projects and important risks implemented by our company or operating companies. The executive side of Panasonic Holdings exercises control its operating companies and group companies while delegating authorities to them.

The Board of Directors and Executive Officer System

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.

Audit & Supervisory Board Members (A&SB Members) and Audit & Supervisory Board (A&SB)

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.

Voluntary Nomination and Compensation Advisory Committee

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 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.

Group Management Meeting/PHD Strategy Meeting

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.