HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED

CORPORATE GOVERNANCE GUIDELINES

(Amended and Restated as of June 10, 2004)

State and federal law, as well as the securities exchanges, impose numerous requirements relating to the functioning of the Board of Directors, including specifying matters as to which Board approval is required, governing relationships with the Company’s outside auditors and federal securities law requirements.  The Board intends to comply with these requirements.  While the Board is familiar with them, they are imposed by law and, accordingly, the Board necessarily relies on management and counsel to identify specific requirements applicable to the Board and the decisions it is called upon to make.

In addition to these requirements, the Board has adopted these Corporate Governance Guidelines to assist it in carrying out its functions.  The Board will operate within and, when applicable, apply these Guidelines to particular actions or decisions in the manner it determines in good faith to be in the best interests of the Company. 

1.  Stockholders:  The Company exists to create sustainable stockholder value.  The Board may consider the interests of all stakeholders it determines to be relevant in its decision making.

2.  Board Functions:  The Board is elected to oversee the management of the Company.  Senior management is responsible for the oversight of the day-to-day business of the Company and all other matters not required by law, stock exchange requirements or these Guidelines to be determined by the Board.  The Board’s principal oversight functions relate to:

·                  the Company’s fundamental business and financial strategies;

·                  CEO and senior management succession, including when appropriate specific succession plans;

·                  material risks the Company confronts and methods to mitigate or manage these risks; and

·                  the Company’s procedures for compliance with legal and other requirements.

3.  Board Composition:  The Board presently has seven members, and it is the present sense of the Board that the number of directors should be kept relatively small to assure effective operation.  The Nominating and Governance Committee shall recommend candidates for election to the Board in accordance with the policies and principles set forth in its charter, the factors set forth in these Guidelines and other criteria approved by the Board or the Nominating and Governance Committee for selecting new directors. 

The Board has not imposed rigid requirements applicable to its composition or as to the qualification of its members.  However, the Board has adopted the following guidelines on these subjects:

·                  a majority of the members of the Board will be independent.  For this purpose, independence will mean the standards applicable under SEC and stock exchange rules as in effect from time to time;

·                  the Board will be comprised of people with diverse backgrounds and experience;

·                  employee directors may not serve as board members for other public companies without the approval of the Board; and

·                  directors should not serve on an excessive number of boards or have other commitments that could reasonably be expected to interfere with their effective service as a director of the Company.  Accordingly:

·                  Directors should offer their resignations for consideration by the Board if they experience material changes in their personal circumstances, including taking on a new principal occupation; and

·                  Non-employee directors should promptly notify the Executive Chairperson and the Chair of the Nominating and Governance Committee prior to joining the board of another public company. 

Directors who are unwilling or unable to commit sufficient time to the discharge of their duties without adequate justification will be asked to leave the Board.

          The Board will annually assess its and its committee’s composition and performance.  This evaluation will determine Board tenure rather than length of service, age or other similar rigid standards.

4.  Operations:  Other than with respect to broad strategic and policy issues, the Board intends to act primarily through or based in substantial part on standing committees established in three general areas: audit, compensation and governance.  The Audit Committee, the Compensation and Option Committee and the Nominating and Governance Committee must each have a written charter approved by the Board (copies of which will be posted on the Company’s website), which charters will establish the purpose and responsibilities of each such committee and, together with any other prescribed functions by the Board, will be that committee’s area of oversight.

The Board and any committee may retain at the Company’s expense such advisors as the Board or a committee may determine to be appropriate.  Management will furnish (or cause to be furnished) to the Board and each committee such information as may be customary or required for the Board or committee to act on any particular matter sufficiently in advance of each meeting (whenever practicable) to provide the directors a reasonable opportunity to obtain appropriate context as to matters to be considered.  In discharging their obligations, members of the Board are expected to adequately prepare for and, to the extent possible, attend and participate in all Board meetings and meetings of Board committees on which they serve.  Management is instructed to be available to the Board, any committee or an individual director to the extent requested.  The Executive Chairperson of the Board, in consultation with appropriate committee chairs, will establish a schedule of regular meetings for each year, as well as agendas for each meeting.  Meetings will be conducted in accordance with the Company’s by-laws, and not less frequently than quarterly the non-management members of the Board will meet in executive session.  The executive sessions will be chaired by non-management directors selected on a rotating basis.

5.  Ethics and Conflicts of Interest:  The Board expects all individuals associated with the Company to act in accordance with the Company’s code of conduct.  Furthermore, the Board will not waive compliance with any ethics policy for any director or executive officer.

6.  Compensation of Directors:  The Compensation and Option Committee will periodically review and recommend to the Board compensation and benefits for non-employee directors.  The current arrangements for director compensation are set forth in the Company’s most recent proxy statement.  Employee directors will not receive compensation for service on the Board or any Board committee.  Non-employee directors may not receive compensation from the Company or any subsidiary other than directors’ fees.  However, this policy will not prohibit the Company from doing business with a company or firm which a director has an ownership interest, is an executive officer or an employee (or his or her immediate family member is an executive officer) where such company or firm makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, does not exceed the greater of $1 million, or 2% of such company’s consolidated gross revenues.

7.  Director Attendance at Annual Meetings of Stockholders:  The Company expects its directors to make reasonable efforts to attend the Company’s annual meetings of stockholders. 

8.  Director Education; Evaluation:  The Company’s management will be responsible for assuring the orientation of new directors and for periodically providing materials or briefing sessions for all directors on subjects that would assist them in discharging their duties.

At least annually, the Nominating and Governance Committee shall oversee an evaluation of the performance of the Board and the Company’s management against these Guidelines and report the results of such evaluation to the Board.  As part of this process, the Board will conduct a self-evaluation to determine whether it and its committees are functioning effectively.

9.  Management Evaluation and Succession:  The Board shall select a CEO in a manner that is in the best interests of the Company.  The Compensation and Option Committee shall conduct an annual review of the performance of the CEO in light of the goals and objectives established by that committee and shall determine and approve the CEO’s compensation based on such review.  The Compensation and Option Committee shall also review, determine and approve the compensation level of the Company’s executive officers, other than the CEO, based on such factors as it deems appropriate.

The Board shall determine the Company’s succession plan, which at a minimum shall include appropriate contingencies in case the CEO retires, is incapacitated or otherwise becomes unable to serve as the Company’s CEO.  The Board will evaluate potential successors to the CEO.  The CEO shall at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.