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Corporate Governance: Policy |
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| Management Structure |
| • Board of Directors |
| The Board of Directors has 20 members, two of whom are external appointees. It supervises the execution of Honda’s business aff airs and makes decisions on matters of importance to the company, including legal issues. The board met eight times in FY2007. |
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| • Board of Corporate Auditors |
The Board of Corporate Auditors consists of six corporate auditors, three of whom are external appointees. Each corporate auditor audits the directors’ execution of duties in accordance with Honda auditing standards, auditing policies, and apportionment of responsibilities and decisions of the Board of Corporate Auditors. Corporate auditors conduct these audits through various means,such as attending meetings of the Board of Directors and reviewing the status of the company’s assets and liabilities. In addition, a Corporate Auditors’ Office has been established to provide direct support to the Board of Corporate Auditors.
Honda has established standards to ensure timely and precise reporting to auditors. In accordance with these standards, reports are filed from time to time on the structure and implementation of internal controls at Honda and its subsidiaries, and in any situation where the company’s actions may significantly impact society. Auditors are invited to attend meetings of the Executive Council and other important meetings. In FY2007 the Board of Corporate Auditors met 13 times.
The Board of Corporate Auditors has certified Shinichi Sakamoto, a Honda corporate auditor, as an audit committee financial expert, as defined in the rules of the Securities and Exchange Commission, pursuant to Section 407 of the US Sarbanes-Oxley Act of 2002. Mr. Sakamoto also qualifi es under Section 121, Article 8 of Japan’s Company Law as a person of advanced knowledge of finance and accounting.
In FY2007 meetings between Honda’s corporate auditors and its independent auditor were held on five occasions. At those meetings, the independent auditor provided the corporate auditors with explanations and reports on accounting audit plans and results. A frank exchange of views took place.
With respect to audit policies and schedules, the corporate auditors closely coordinate their activities with the Audit Office, which is responsible for internal audits. In FY2007 corporate auditors and the Audit Office, either independently or in collaboration, conducted business audits of a total of 130 companies from among Honda’s subsidiaries and affiliates in Japan and elsewhere. |
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| • Decisions Regarding Director Candidates |
| Candidates for director are nominated and appointed by the Board of Directors. Candidates for corporate auditor are nominated and appointed by resolution of the Board of Directors, subject to agreement of the Board of Corporate Auditors. |
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| • Director Remuneration |
| The total amount of remuneration and bonuses of directors and corporate auditors is determined according to criteria that refl ect company performance. Remuneration for directors and corporate auditors is based on criteria approved by the Board of Directors, and is paid within the extent of the maximum amount set by resolution of the Ordinary General Meeting of Shareholders. Bonuses for directors and corporate auditors are based on decisions of the Ordinary General Meeting of Shareholders, taking into consideration company profits during the fiscal year, past bonuses and other factors. |
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| • Accounting Audits |
To ensure proper auditing of the company’s accounts, the Board of Corporate Auditors and the Board of Directors receive auditing reports based on Japan’s Company Law and Securities and Exchange Law, as well the US Securities Exchange Act. In addition, they supervise the election of independent auditors, their remuneration and non-audit services.
In FY2007 Honda appointed Azsa & Co. as its independent auditor for the purposes of Japan’s Company Law and Securities and Exchange Law, as well as the US Securities Exchange Act. |
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| Business Execution System |
| •Organization |
Honda has six administrative regions around the world to execute and develop business based on its fundamental corporate philosophy. These regional administrations adopt long-term perspectives and maintain close ties with local communities.
Honda’s four business divisions.motorcycles, automobiles, power products and components. formulate medium- and long-term business plans. Each division aims to maximize its performance on a global basis. Each functional operation, including Customer Service Operations, Production Operations, Purchasing Operations, Business Management Operations and Business Support Operations, supports the other functional operations, with the aim of increasing Honda’s operational efficiency.
Research and development activities are conducted principally at Honda’s independent subsidiaries. Honda R&D Co., Ltd. is responsible for product research and development, while Honda Engineering Co., Ltd. handles research and development in the area of production technology. The Honda Group proactively conducts research and development in advanced technologies with the aim of creating products that are distinctive and internationally competitive. |
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| • Business Execution Officer System |
| Honda assigns a general manager from the Board of Directors or an Operating Officer to each regional administrative, business and functional division, as well as to each research and development subsidiary. By ensuring swift, optimal decision-making in each region and workplace, Honda maintains a highly efficient business execution system. |
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| • Executive Council |
| Honda has established an Executive Council, which consists of nine representative directors, including the president and vice presidents. Along with discussing in advance the agendas of meetings of the Board of Directors, the Executive Council discusses important management issues within the scope of authority conferred upon it by the Board of Directors. The Executive Council met 27 times in FY2007. |
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| • Regional Operating Councils |
| To enhance the independence of each administrative region and ensure swift decision-making, regional operating councils have been established in each administrative region to discuss important regional management issues within the scope of authority conferred upon them by the Executive Council. |
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