Basic stance on corporate governance

To ensure objective oversight of the Company's management, outside directors and outside auditors are appointed to the Board of Directors and the Board of Corporate Auditors, which are responsible for supervising and auditing corporate operations. The Company has also introduced an operating officer system aimed at strengthening both the execution of business operations at the regional and local levels and making management decisions quickly and appropriately. The term of office of each director is limited to one year, and remuneration payable to directors is determined according to a standard that reflects the Company's business performance. These policies are to maximize the flexibility with which our directors respond to changes in the operating environment.

With respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. For example, separate headquarters have been set up for each region, business, and function, and an operating officer has been assigned to each headquarters and main division. In addition, we have implemented a system that enables prompt and appropriate decision-making by having the Executive Council and regional operating boards deliberate important management issues.

With respect to internal controls, compliance and risk management systems have been designed and implemented appropriately following basic policies for the design of internal controls and directives of the Board of Directors.

To enhance even further the trust and understanding of shareholders, investors and society, Honda's basic policy emphasizes the appropriate disclosure of Company information, such as by disclosing financial results on a quarterly basis and giving public notice of such financial results and disclosing its management strategies in a timely and accurate manner. Going forward, Honda will continue to raise the level of transparency in its operations.