Honda 2015 Annual Report Download - page 21

Corporate Governance Practices Followed
by NYSE-listed U.S. Companies
Corporate Governance Practices Followed by Honda
A NYSE-listed U.S. company must have an audit com-
mittee composed entirely of independent directors, and
the audit committee must have at least three members.
Like a majority of Japanese companies, Honda employs the Board of Corporate Auditors system as described above. Under this system, the Board of
Corporate Auditors is a legally separate and independent body from the Board of Directors. The main function of the Board of Corporate Auditors is
similar to that of independent directors, including those who are members of the audit committee, of a U.S. company: to monitor the performance of
the directors, and review and express opinions on the method of auditing by the company’s accounting audit firm and on such accounting audit firm’s
audit reports, for the protection of the company’s shareholders.
Japanese companies which employ the Board of Corporate Auditors system, including Honda, are required to have at least three corporate auditors.
Currently, Honda has five Corporate Auditors. Each Corporate Auditor has a four-year term. In contrast, the term of each Director of Honda is one year.
With respect to the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees, Honda
relies on an exemption under that rule which is available to foreign private issuers with Board of Corporate Auditors meeting certain criteria.
A NYSE-listed U.S. company must have a nominating/
corporate governance committee entirely of independent
directors.
Honda’s Directors are elected at a meeting of shareholders. Its Board of Directors does not have the power to fill vacancies thereon.
Honda’s Corporate Auditors are also elected at a meeting of shareholders. A proposal by Honda’s Board of Directors to elect a Corporate Auditor
must be approved by a resolution of its Board of Corporate Auditors. The Board of Corporate Auditors is empowered to request that Honda’s Directors
submit a proposal for election of a Corporate Auditor to a meeting of shareholders. The Corporate Auditors have the right to state their opinion
concerning election of a Corporate Auditor at the meeting of shareholders.
A NYSE-listed U.S. company must have a compensation
committee composed entirely of independent directors.
Compensation committee members must satisfy the
additional independence requirements under Section
303A.02(a)(ii) of the NYSE Listed Company Manual. A
compensation committee must also have authority to
retain or obtain the advice of compensation and other
advisers, subject to prescribed independence criteria
that the committee must consider prior to engaging any
such adviser.
Maximum total amounts of compensation for Honda’s Directors and Corporate Auditors are proposed to, and voted on, by a meeting of shareholders.
Once the proposals for such maximum total amounts of compensation are approved at the meeting of shareholders, each of the Board of Directors
and Board of Corporate Auditors determines the compensation amount for each member within the respective maximum total amounts.
A NYSE-listed U.S. company must generally obtain
shareholder approval with respect to any equity compen-
sation plan.
Currently, Honda does not adopt stock option compensation plans. If Honda were to adopt such a plan, Honda must obtain shareholder approval
with respect to compensation for the Directors in the form of stock options, but the conditions of the stock options may be determined by the Board
of Directors unless they are issued with specifically favorable conditions or price concerning the issuance and exercise of the stock options.
* For information about Honda’s corporate governance practices, please refer to (http://world.honda.com/sustainability/management/governance/)
Honda Motor Co., Ltd. Annual Report 2015 20
5 Corporate Governance
1 The Power of Dreams
2 Financial Highlights
3 To Our Shareholders
4 Review of Operations
6 Financial Section
7
Investor Relations
Information
Return to last
page opened
Go to
contents page