Corporate Governance

The foundation of "CSR Management" is a healthy management system. Panasonic has a clear separation of functions between the Directors and Executive Officers, effective monitoring by auditors, and implementation of Labor-Management Councils, and through these and other actions, Panasonic is building a balanced corporate governance system. The management is also establishing a number of committees to discuss sustainability issues such as the environment.

Panasonic's corporate governance system is based on the Board of Directors, which is responsible for deciding important operational matters for the whole Group and monitoring the execution of business by Directors, and the Board of Corporate Auditors, which is independent from the Board of Directors. The Corporate Auditors and the Board of Corporate Auditors are responsible for auditing the performance of duties by Directors.

Panasonic has an optimum management and governance structure tailored to the Group's business domainbased organizational structure. Under this structure, Panasonic has empowered each of its business domain companies through delegation of authority. At the same time, the Company employs an Executive Officer System to provide for the execution of business at various domestic and overseas Panasonic Group companies. This system facilitates the development of optimum corporate strategies that integrate the Group's comprehensive strengths.

In addition, Panasonic realigned the role and structure of the Board of Directors to ensure swift and strategic decision-making, as well as the optimum monitoring of Groupwide matters. Specifically, the Board of Directors concentrates on corporate strategies and the supervision of business domain companies, while Executive Officers handle responsibilities relating to day-to-day operations. Taking into consideration the diversified scope of its business operations, Panasonic has opted to maintain a system where Executive Officers, who are most familiar with the specifics of their respective operations, take an active part in the Board of Directors. Furthermore, to clarify the responsibilities of Directors and create a more dynamic organization, the Company has limited the term of each Director to one year.

A CSR seminar at the Corporate Industrial Marketing & Sales Division

Pursuant to the Company Law, Panasonic has appointed Corporate Auditors and established a Board of Corporate Auditors, made up of Corporate Auditors. The Corporate Auditors and Board of Corporate Auditors monitor the status of corporate governance and keep abreast of the day-to-day activities of management, including the Board of Directors. As of June 26, 2008, the Company had five Corporate Auditors, including three Outside Corporate Auditors.

Corporate Auditors participate in shareholders' meetings and Board of Directors' meetings, and have legal authority to receive reports from Directors, employees and accounting auditors. Full-time Senior Auditors also attend important meetings and conduct checks in order to ensure effective monitoring. To augment internal auditing functions in the Group, Panasonic has assigned eight non-statutory full-time senior auditors at internal divisional companies to assist in audits by Corporate Auditors. Panasonic also inaugurated regular Group Auditor Meetings(comprising 18 full-time senior auditors and non-statutory full-time senior auditors from main Company subsidiaries)chaired by the Chairman of the Board of Corporate Auditors of the Company to enhance collaboration between the Company's Corporate Auditors, non-statutory full-time senior auditors of internal divisional companies and Corporate Auditors of the Company's subsidiaries. In addition, as part of their audit duties, Corporate Auditors maintain close contact with the Internal Audit Group to ensure effective audits. Moreover, in order to enhance the effectiveness of audits conducted by Corporate Auditors and ensure the smooth implementation of audits, Panasonic has established a Corporate Auditor's Office with a full-time staff of five under the direct control of the Board of Corporate Auditors.

Guided by its management philosophy and the basic policy adopted relating to the construction of internal control systems, Panasonic continues to develop a system of internal controls to provide a safe, reliable management platform to support global business strategy and activities. Specifically, three entities with complementary functions (the Compliance Committee, the G&G (Global & Group) Risk Management Committee, and the Disclosure Committee) coordinate ongoing efforts to develop internal controls. They are working not only to organize management-level systems for internal control, but also to raise employee awareness, establish behavior aligned with the internal control system and cultivate the necessary corporate culture.

This code establishes common group-wide standards to guide employees in the practical implementation of Panasonic's management philosophy. Translated into 21 languages and formally adopted by board resolutions at each company within the Group, the code applies to 300,000 Directors, Executive Officers and employees of Panasonic worldwide. We have also developed an educational and training framework and related initiatives to support increased internal compliance with the code.

Panasonic Code of Conduct (To Corporate Profile section)

Using its global assessment standard, Panasonic collects and centrally assesses a comprehensive collection of risk information, and integrates business management with risk management activities. The organization established to do this consists of the G&G Risk Management Committee, which is made up of the Directors and Executive Officers that oversee the functions and divisions at the head office, and there is also a similar committee established at each of the business domain companies and related companies. This system enables Panasonic to effectively act globally and group wide.

Specifically, as shown in the diagram below, the G&G Risk Management structure performs a risk assessment on all business domain companies, subsidiaries, related functions, and G&G Risk Management Committee once a year integrated with the formulation of annual business plans, and the major risks for each are determined. High-priority risks are determined, and a plan for swift, precise action is established, and its progress monitored in close coordination among each other.

There is also a Business Continuity Plan (BCP) to counter the risk of large natural disasters. By fiscal 2010, all business domain companies should have a BCP in place for at least one location.

Panasonic will also formulate BCP for other risks that may threaten business operations, such as a pandemic flu outbreak.

At Panasonic, important management issues are discussed in advance with the labor union, and Management-Labor Committees are established as forums for people to express their opinions on these issues. Important decisions are explained to labor union leaders, and Labor-Management Councils are held to provide an opportunity for people to express their approval or dissent.

Both the Management-Labor Committees and Labor-Management Councils are held regularly at the corporate level, business domain level, and business unit level. The topmanagement level Management-Labor Committee is held once a month and is attended by the President, Executive Officer in charge of personnel, and the head of the labor union's Central Executive Committee. The top-management level Labor-Management Council is held twice a year and is attended by all Executive Officers at the level of Managing Director or above and the members of the labor union's Central Executive Committee.

As part of ensuring an open and transparent corporate culture, Panasonic operates six head office-based hotlines in Japan covering the areas of business ethics, fair trade, equal opportunities, fair business, global business ethics, and auditing or accounting issues. Business domain companies, subsidiaries and regional headquarters have also established and operate separate hotlines to aid swift resolution of issues.