6-K 1 sne-6k_052020.htm CURRENT REPORT OF FOREIGN ISSUER
 

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

 

For the month of May 2020
Commission File Number: 001-06439

 

SONY CORPORATION
(Translation of registrant’s name into English)

 

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN
(Address of principal executive offices)

 

The registrant files annual reports under cover of Form 20-F.

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,

 

 

 

Form 20-F  ☒

  

Form 40-F  ☐

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes ☐ No ☒

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-            

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

SONY CORPORATION

 

(Registrant)

 

 

 

 

By:

/s/ Hiroki Totoki

 

 

        (Signature)

 

Hiroki Totoki

 

Senior Executive Vice President and

 

Chief Financial Officer

 

Date: May 20, 2020

 

 

 

 
 

 

SONY CORPORATION

 

Notice of the Ordinary General Meeting of
Shareholders to be held on June 26, 2020

 

To the Registered Holders of American Depositary Receipts representing shares of Common Stock of Sony Corporation (the “Corporation”):

 

The undersigned Depositary has received a notice that the Corporation has called an ordinary general meeting of shareholders to be held in Tokyo, Japan on June 26, 2020 (the “Meeting”) for the following purposes:

 

MATTERS TO BE REPORTED:

 

To receive reports on the business report, non-consolidated financial statements, consolidated financial statements, as well as audit reports on the consolidated financial statements by the Independent Auditors (certified public accountants) and the Audit Committee for the fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020) pursuant to the Companies Act of Japan.

 

PROPOSALS TO BE ACTED UPON:

 

1.   To amend a part of the Articles of Incorporation.

2.   To elect 12 Directors.

3.   To issue Stock Acquisition Rights for the purpose of granting stock options.

 

EXPLANATION REGARDING THE SUBJECT MATTER OF THE MEETING

 

MATTERS TO BE REPORTED:

 

To receive reports on the business report, non-consolidated financial statements, consolidated financial statements, as well as audit reports on the consolidated financial statements by the Independent Auditors (certified public accountants) and the Audit Committee for the fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020).

 

Note: The Consolidated Financial Statements pursuant to the Companies Act of Japan (Translation) are available on the Sony Investor Relations website.

 

This document can be accessed at https://www.sony.net/SonyInfo/IR/stock/shareholders_meeting/Meeting103/

 

 

1

 

 

PROPOSALS TO BE ACTED UPON:

 

1.   To amend a part of the Articles of Incorporation.

 

1. Reasons for Amendments

 

The Corporation currently operates as the headquarters of the Sony Group, and provides headquarters support functions for its electronics business. The Corporation plans to change its trade name as of April 1, 2021 in connection with the separation and redefinition of these functions, with the Corporation operating solely as the headquarters of the Sony Group. After April 1, 2021, Sony Electronics Corporation, a wholly-owned subsidiary of the Corporation, plans to succeed to the trade name “Sony Corporation.”

 

2. Contents of Amendments

 

Proposed amendments are set out below:

(Underlined portions are to be amended.)

Current Articles

Proposed Amendment

CHAPTER I

GENERAL PROVISIONS

 

Article 1.  (Trade Name)

 

The name of the Corporation shall be “Sony Kabushiki Kaisha” and in English translation it shall be “SONY CORPORATION”.

 

CHAPTER I

GENERAL PROVISIONS

 

Article 1.  (Trade Name)

 

The name of the Corporation shall be “Sony Group Kabushiki Kaisha” and in English translation it shall be “SONY GROUP CORPORATION”.

 

[New]

 

SUPPLEMENTARY PROVISION

 

The amendment to Article 1 (Trade Name) shall take effect on April 1, 2021, provided that if the Board of Directors of the Corporation determines to change the effective date to another date at a meeting of the Board of Directors to be held before March 31, 2021, the amendment shall take effect on such newly determined date. This supplementary provision shall be deleted after the date when the amendment to Article 1 takes effect.

 

 

2.    To elect 12 Directors.

 

The term of office of all 13 Directors currently in office will expire at the conclusion of the Meeting.  In accordance with the decision of the Nominating Committee, the election of the following 12 Directors is proposed.

 

  Policy and procedures for the selection of director candidates

 

With a view toward securing effective input and oversight by the Board of Directors of the Corporation (the “Board”), the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law.

 

 

2

 

 

The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing the corporate value of the Corporation and its consolidated subsidiaries (the “Sony Group”).  The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s experience, achievements, expertise and internationality), availability, and independence, as well as diversity in the boardroom, the appropriate size of the Board, and the knowledge, experiences and talent needed for the role.

 

Under the Charter of the Board of Directors (the “Board Charter”), the Corporation also requires that the Board consist of not fewer than ten (10) Directors and not more than twenty (20) Directors.  In addition, since 2005, the majority of the members of the Board have been outside Directors.

 

Director qualifications

 

The qualifications for Directors of the Corporation under the Board Charter are generally as summarized below.  All Director candidates satisfy the qualifications for Directors as set forth below.

 

Of the 12 Director candidates, 9 are candidates for outside Director.  As of the date of this proposal, each of the 9 candidates for outside Director satisfies the additional qualifications for outside Directors, and the Corporation has made a filing with the Tokyo Stock Exchange, where the shares of the Corporation are listed, indicating that each of them will be an independent Director under the Securities Listing Regulations of the Tokyo Stock Exchange.

 

All Directors Qualifications:

(1)   Shall not be a director, a statutory auditor, a corporate executive officer, a general manager or other employee of any company in competition with the Sony Group in any of the Sony Group’s principal businesses (hereinafter referred to as “Competing Company”) or own three percent (3%) or more of the shares of any Competing Company.

(2)   Shall not be or have been a representative partner or partner of any independent auditor of the Sony Group during the three (3) years before being nominated as a Director.

(3)   Shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.

 

Outside Directors Qualifications:

(1)    Shall not have received directly from the Sony Group, during any consecutive twelve-month (12 month) period within the last three (3) years, more than an amount equivalent to one hundred twenty thousand United States dollars (US$120,000), other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

(2)   Shall not be an executive director, a corporate executive officer, a general manager or other employee of any company whose aggregate amount of transactions with the Sony Group, in any of the last three (3) fiscal years, exceeds the greater of an amount equivalent to one million United States dollars (US$1,000,000), or two percent (2%) of the annual consolidated sales of such company.

 

Also, each outside Director may, by resolution of the Nominating Committee, be nominated as a Director candidate for re-election up to five (5) times, and thereafter by resolution of the Nominating Committee and by consent of all of the Directors.  Even with the consent of all of the Directors, in no event may any outside Director be re-elected more than eight (8) times.

 

 

3

 

 

The candidates for Director are as follows:

 

 

Notes:

 

 

1.

The expected appointment of each candidate for Director will be determined at the meeting of the Board to be held after this Meeting.

 

2.

Since Mr. Hiroki Totoki, Ms. Sakie Akiyama, Ms. Wendy Becker and Mr. Yoshihiko Hatanaka were newly elected at the Ordinary General Meeting of Shareholders held on June 18, 2019, the number of Board meetings they were eligible to attend is different from other directors.

 

3.

The Corporation has concluded agreements limiting the liability for 7 of the Director candidates, each of whom is currently an outside Director or other non-executive Director. If Mr. Adam Crozier, Ms. Keiko Kishigami and Mr. Joseph A. Kraft Jr., new candidates for outside Directors, are elected, the Corporation plans to conclude such an agreement with each of them.  For a summary of the limited liability agreements, please refer to page 15.

 

4.

As of the date of this proposal, each of the 9 candidates for outside Director satisfies the additional qualifications for outside Directors, and the Corporation has made a filing with the Tokyo Stock Exchange, where the shares of the Corporation are listed, indicating that each of them will be an independent Director under the Securities Listing Regulations of the Tokyo Stock Exchange.

 

4

 

 

1. Kenichiro Yoshida

Reappointment

 

 

 

image

Current Responsibility as a Director

Member of the Nominating Committee

Date of Birth

October 20, 1959

Number of Years Served as a Director

6 years

Record of attendance at the Board of Directors Meetings

100% (9/9)

Number of the Corporation’s Shares Held

175,000 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1983

Joined Sony Corporation

July 2000

Joined Sony Communication Network Corporation (currently Sony Network Communications Inc.)

May 2001

Senior Vice President, Sony Communication Network Corporation

April 2005

President and Representative Director, Sony Communication Network Corporation

December 2013

Executive Vice President, Chief Strategy Officer and Deputy Chief Financial Officer, Corporate Executive Officer, Sony Corporation

April 2014

Executive Vice President and Chief Financial Officer, Representative Corporate Executive Officer, Sony Corporation

June 2014

Director, Sony Corporation (present)

April 2015

Executive Deputy President and Chief Financial Officer, Representative Corporate Executive Officer, Sony Corporation

April 2018

President and Chief Executive Officer, Representative Corporate Executive Officer, Sony Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination

As the Chief Executive Officer of the Sony Group, this candidate is responsible for the overall management of the entire Group, and he is nominated to be a candidate for Director by resolution of the Nominating Committee.

 

2. Hiroki Totoki

Reappointment

 

 

 

image

Current Responsibility as a Director

Date of Birth

July 17, 1964

Number of Years Served as a Director

1 year

Record of attendance at the Board of Directors Meetings

100% (7/7)

Number of the Corporation’s Shares Held

29,600 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1987

Joined Sony Corporation

February 2002

Representative Director, Sony Bank Incorporated

June 2005

Director, Corporate Executive Officer and Senior Managing Director, Sony Communication Network Corporation (currently Sony Network Communications Inc.)

April 2012

Representative Director, Corporate Executive Officer and Senior Managing Director, So-net Entertainment Corporation (currently Sony Network Communications Inc.)

April 2013

Representative Director, Corporate Executive Officer, Deputy President and Chief Financial Officer, So-net Entertainment Corporation

December 2013

Senior Vice President, Corporate Executive, Sony Corporation

November 2014

President and Chief Executive Officer, Sony Mobile Communications Inc.

June 2015

Director, Chairman, So-net Corporation (currently Sony Network Communications Inc.)

April 2016

Executive Vice President, Corporate Executive Officer, Sony Corporation

In charge of New Business Platform (Strategy)

 

President and Representative Director, So-net Corporation

June 2017

Executive Vice President, Chief Strategy Officer, Corporate Executive Officer, Sony Corporation

In charge of Mid-to-Long Term Business Strategy, New Business

April 2018

Executive Vice President, Chief Financial Officer, Representative Corporate Executive Officer, Sony Corporation

June 2018

Senior Executive Vice President, Chief Financial Officer, Representative Corporate Executive Officer, Sony Corporation (present)

June 2019

Director, Sony Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination

As the Chief Financial Officer, he is responsible for the headquarters functions of Corporate Planning and Control, Corporate Strategy, Accounting, Tax, Finance, Investor Relations, Disclosure Controls, Information Systems, Risk Management, Internal Audit and SOX 404 management, and he is nominated to be a candidate for Director by resolution of the Nominating Committee.

 

 

5

 

 

 

3. Shuzo Sumi

Reappointment

 

 

Candidate for outside Director

 

 

 

image

Current Responsibility as a Director

Chairman of the Board

Chair of the Nominating Committee

Date of Birth

July 11, 1947

Number of Years Served as a Director

3 years

Record of attendance at the Board of Directors Meetings

100% (9/9)

Number of the Corporation’s Shares Held

3,700 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1970

Joined Tokio Marine & Fire Insurance Co., Ltd.

June 2000

Director and Chief Representative in London, Overseas Division, Tokio Marine & Fire Insurance Co., Ltd.

June 2002

Managing Director, Tokio Marine & Fire Insurance Co., Ltd.

October 2004

Managing Director, Tokio Marine & Nichido Fire Insurance Co., Ltd.

June 2005

Senior Managing Director, Tokio Marine & Nichido Fire Insurance Co., Ltd.

June 2007

President & Chief Executive Officer, Tokio Marine & Nichido Fire Insurance Co., Ltd.

 

President & Chief Executive Officer, Tokio Marine Holdings, Inc.

June 2013

Chairman of the Board, Tokio Marine & Nichido Fire Insurance Co., Ltd.

 

Chairman of the Board, Tokio Marine Holdings, Inc.

June 2014

Outside Director, Toyota Industries Corporation (present)

April 2016

Senior Executive Advisor, Tokio Marine & Nichido Fire Insurance Co., Ltd. (present)

June 2017

Director, Sony Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate has extensive experience from managing a global company and extensive insight from various activities in the industrial community, and he is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

4. Tim Schaaff

Reappointment

 

 

 

image

Current Responsibility as a Director

Director in charge of Information Security

Date of Birth

December 5, 1959

Number of Years Served as a Director

7 years

Record of attendance at the Board of Directors Meetings

100% (9/9)

Number of the Corporation’s Shares Held

7,800 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

December 1982

Joined New England Digital Corporation

July 1991

Joined Apple Computer, Inc.

1998

Vice President, Apple Computer, Inc.

December 2005

Senior Vice President, Sony Corporation of America

November 2006

Deputy President, Technology Development Group, Sony Corporation

June 2008

President, Sony Media Software and Services Inc.

December 2009

President, Sony Network Entertainment International LLC

June 2013

Director, Sony Corporation (present)

July 2015

Chief Product Officer, Intertrust Technologies Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination

In addition to expertise in software technology and network services, this candidate has experience leading Sony’s network services business, and he is nominated to be a candidate for Director by resolution of the Nominating Committee.  This candidate does not satisfy the qualification for outside Director since he worked in the Sony Group in the past.

 

6

 

 

 

5. Kazuo Matsunaga

Reappointment

 

 

 

Candidate for outside Director

 

 

 

 

 

image

Current Responsibility as a Director

Vice Chairman of the Board

Chair of the Audit Committee

Date of Birth

February 28, 1952

Number of Years Served as a Director

6 years

Record of attendance at the Board of Directors Meetings

100% (9/9)

Number of the Corporation’s Shares Held

4,500 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1974

Joined Ministry of International Trade and Industry (currently Ministry of Economy, Trade and Industry (“METI”))

June 2004

Director-General, Nuclear and Industrial Safety Agency, METI

September 2005

Assistant Vice-Minister, Minister’s Secretariat, METI

July 2006

Deputy Vice-Minister, Minister’s Secretariat, METI

July 2008

Director-General, Economic and Industrial Policy Bureau, METI

July 2010

Vice-Minister of Economy, Trade and Industry, METI

April 2012

Specially-appointed Professor, Graduate School of International Corporate Strategy, Hitotsubashi University (present)

June 2013

Outside Director, Takasago Thermal Engineering Co., Ltd. (present)

June 2014

Director, Sony Corporation (present)

 

Outside Director, Hashimoto Sogyo Co., Ltd. (currently Hashimoto Sogyo Holdings Co., Ltd.) (present)

April 2016

Vice Chairman of the Board, Mitsubishi Fuso Truck and Bus Corporation

January 2017

Chairman of the Board, Mitsubishi Fuso Truck and Bus Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate has extensive insight and experience in global industry and administration from his career at the Ministry of Economy, Trade and Industry, and he is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

 

7

 

 

6. Toshiko Oka

Reappointment

 

 

 

Candidate for outside Director

 

 

 

image

Current Responsibility as a Director

Member of the Audit Committee

Date of Birth

March 7, 1964

Number of Years Served as a Director

2 years

Record of attendance at the Board of Directors Meetings

100% (9/9)

Number of the Corporation’s Shares Held

2,000 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1986

Joined Tohmatsu Touche Ross Consulting Limited

July 2000

Joined Asahi Arthur Anderson Limited

September 2002

Principal, Deloitte Tohmatsu Consulting Co., Ltd. (currently ABeam Consulting Ltd.)

April 2005

President and Representative Director, ABeam M&A Consulting Ltd. (currently PwC Advisory LLC)

April 2016

Partner, PwC Advisory LLC

June 2016

CEO, Oka & Company Ltd. (present)

 

Outside Director, Mitsubishi Corporation (present) (She will resign as Outside Director, Mitsubishi Corporation on June 19, 2020.)

 

Outside Director, Hitachi Metals, Ltd. (present)

June 2018

Director, Sony Corporation (present)

June 2019

Outside Director, Happinet Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

In addition to broad expertise in developing management strategies, including as an M&A consultant, this candidate possesses extensive insight in corporate management and accounting through her experience at an accounting firm and as an outside director/auditor, and she is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

 

*

In April 2020, Hitachi Metals, Ltd. (“Hitachi Metals”), where Ms. Toshiko Oka is an outside director, announced that Hitachi Metals had discovered misconduct including misrepresentation of test results in the inspection reports submitted to customers of Hitachi Metals and its subsidiaries.  Although she was not aware of the conduct until it was discovered, she had previously made a statement regarding compliance to the Hitachi Metals’ board of directors and the audit committee.  After the conduct was discovered, she has been recommending necessary measures to investigate the facts, understand the cause, and prevent the recurrence of such matter.

 

7. Sakie Akiyama

Reappointment

 

 

 

Candidate for outside Director

 

 

 

image

Current Responsibility as a Director

Member of the Audit Committee

Date of Birth

December 1, 1962

Number of Years Served as a Director

1 year

Record of attendance at the Board of Directors Meetings

100% (7/7)

Number of the Corporation’s Shares Held

900 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1987

Joined Arthur Andersen & Co.

April 1994

Founder and CEO, Saki Corporation

October 2018

Founder, Saki Corporation (present)

June 2019

Director, Sony Corporation (present)

Outside Director, Japan Post Holdings Co., Ltd. (present)

Outside Director, Orix Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

In addition to her experience as an international business consultant, this candidate launched and successfully developed an industrial robotic inspection company and has extensive experience serving as a member of government committees/working groups, and she is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

8

 

 

 

8. Wendy Becker

Reappointment

 

 

 

Candidate for outside Director

 

 

 

 image

Current Responsibility as a Director

Member of the Compensation Committee

Date of Birth

November 2, 1965

Number of Years Served as a Director

1 year

Record of attendance at the Board of Directors Meetings

100% (7/7)

Number of the Corporation’s Shares Held

900 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

September 1987

Brand Manager, Procter & Gamble Company

September 1993

Consultant, McKinsey & Company, Inc.

December 1998

Partner, McKinsey & Company, Inc.

February 2008

Managing Director, Residential, TalkTalk, The Carphone Warehouse Ltd.

 

Board member, Member of Remuneration Committee, Whitbread plc

September 2009

Chief Marketing Officer, Vodafone Group plc

September 2012

Chief Operating Officer, Jack Wills Ltd.

October 2013

CEO, Jack Wills Ltd.

February 2017

Board member, Chair of Remuneration Committee, Great Portland Estates plc (present)

September 2017

Board member, Logitech International S.A. (present)

June 2019

Director, Sony Corporation (present)

September 2019

Chairperson of the Board, Chair of Nominating Committee, Logitech International S.A. (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate possesses practical and diverse capabilities in corporate management due to her broad career in the consulting industry in North America and Europe, and experience as an executive of various companies, including telecommunications and technology companies, and she is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

 

9

 

 

9. Yoshihiko Hatanaka

Reappointment

 

 

 

Candidate for outside Director

 

 

 

 image

Current Responsibility as a Director

Member of the Nominating Committee

Date of Birth

April 20, 1957

Number of Years Served as a Director

1 year

Record of attendance at the Board of Directors Meetings

100% (7/7)

Number of the Corporation’s Shares Held

900 shares

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

April 1980

Joined Fujisawa Pharmaceutical Co., Ltd. (currently Astellas Pharma Inc.)

June 2005

Corporate Executive, Vice President, Corporate Planning, Corporate Strategy, Astellas Pharma Inc.

April 2006

Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.

June 2008

Senior Corporate Executive of Astellas Pharma Inc. and President & CEO, Astellas US LLC and President & CEO, Astellas Pharma US, Inc.

April 2009

Senior Corporate Executive, Chief Strategy Officer and Chief Financial Officer, Astellas Pharma Inc.

June 2011

Representative Director, President & CEO, Astellas Pharma Inc.

April 2018

Representative Director, Chairman of the Board, Astellas Pharma Inc. (present)

June 2019

Director, Sony Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate has broad experience and extensive insight in global corporate management from his career in the United States and Europe, and leading successful company integration as a corporate planning officer.  He is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

10. Adam Crozier

New Candidate

 

 

 

Candidate for outside Director

 

 

 

image 

Current Responsibility as a Director

Date of Birth

January 26, 1964

Number of Years Served as a Director

Record of attendance at the Board of Directors Meetings

Number of the Corporation’s Shares Held

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

January 1995

Joint CEO, Saatchi & Saatchi Group Ltd.

January 2000

CEO, The Football Association

February 2003

CEO, Royal Mail Group Ltd.

April 2010

CEO, ITV plc

April 2017

Non-Executive Chairman, Whitbread Group plc (present)

December 2018

Non-Executive Chairman, ASOS plc (present)

February 2020

Non-Executive Chairman, Kantar Group Ltd. (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate has a track record of realizing transformation and growth in various companies including the media and entertainment industries, as well as practical and diversified knowledge of global corporate management.  He is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

 

10

 

 

11. Keiko Kishigami

New Candidate

 

 

 

Candidate for outside Director

 

 

 

 image

Current Responsibility as a Director

Date of Birth

January 28, 1957

Number of Years Served as a Director

Record of attendance at the Board of Directors Meetings

Number of the Corporation’s Shares Held

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

October 1985

Joined Peat Marwick Minato (currently Ernst & Young ShinNihon LLC)

August 1989

Registered as Certified Public Accountant (present)

December 1997

Partner, Century Audit Corporation (currently Ernst & Young ShinNihon LLC)

May 2004

Representative Partner (currently Senior Partner), Ernst & Young ShinNihon (currently Ernst & Young ShinNihon LLC)

September 2018

Board Member, WWF Japan (present)

June 2019

Outside Auditor, Okamura Corporation (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

In addition to extensive auditing experience across various companies in Japan and overseas as a certified public accountant and in-depth expertise on internal controls, this candidate has interest and knowledge regarding ESG, and she is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

12. Joseph A. Kraft Jr.

New Candidate

 

 

 

Candidate for outside Director

 

 

 

 image

Current Responsibility as a Director

Date of Birth

May 12, 1964

Number of Years Served as a Director

Record of attendance at the Board of Directors Meetings

Number of the Corporation’s Shares Held

 

Brief Personal History and Principal Business Activities Outside the Corporation

 

 

July 1986

Joined Morgan Stanley Inc.

January 2000

Managing Director, Morgan Stanley Inc.

April 2007

Managing Director, Head of Capital Markets Division, Dresdner Kleinwort Japan

March 2010

 Deputy Branch Manager & Managing Director, Bank of America Merrill Lynch Japan

July 2015

 CEO, Rorschach Advisory Inc. (present)

 

 

 

 

 

 

 

 

Reasons for the Nomination as Outside Director

This candidate has in-depth insight into, and extensive knowledge of, the global financial industry and capital markets based on his many years of experience, and a broad network spanning diverse industries.  He is nominated to be a candidate for outside Director by resolution of the Nominating Committee.

 

 

11

 

 

3.       To issue Stock Acquisition Rights for the purpose of granting stock options.

 

It is proposed that the Corporation will issue stock acquisition rights to corporate executive officers and employees of the Corporation, and directors, officers and employees of subsidiaries of the Corporation, for the purpose of granting stock options, pursuant to the provisions of Articles 236, 238 and 239 of the Companies Act of Japan, and that the Corporation will delegate the determination of the terms of such stock acquisition rights to the Board.

In connection with this agenda, no such stock acquisition rights will be issued to outside Directors of the Corporation.

 

I.The reason the Corporation needs to issue stock acquisition rights on favorable terms.

 

The Corporation will issue stock acquisition rights to corporate executive officers and employees of the Corporation, and directors, officers and employees of subsidiaries of the Corporation, for the purpose of giving them an incentive to contribute towards the improvement of the business performance of the Sony Group and thereby improving the business performance of the Sony Group by making the economic interest which such directors, officers, or employees will receive correspond to the business performance of the Sony Group.

 

II.

 

Terms and conditions of the stock acquisition rights (“Stock Acquisition Rights”), the concrete terms of which the Board may determine pursuant to the delegation of such determination upon approval at the Meeting.

 

1.Maximum Limit of Aggregate Numbers of Stock Acquisition Rights

 

Not exceeding 50,000

 

2.Payment in exchange for Stock Acquisition Rights

 

Stock Acquisition Rights are issued without payment of any consideration to the Corporation.

 

3. Matters regarding Stock Acquisition Rights

 

(1)Class and Number of Shares to be Issued or Transferred upon Exercise of Stock Acquisition Rights

 

The class of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall be shares of common stock, and the number of shares to be issued or transferred upon exercise of each Stock Acquisition Right (the “Number of Granted Shares”) shall be 100 shares.

 

The aggregate number of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall not exceed 5,000,000 shares of common stock of the Corporation (the “Common Stock”).  However, in the event that the Number of Granted Shares is adjusted pursuant to (2) below, the aggregate number of shares to be issued or transferred upon exercise of Stock Acquisition Rights shall not exceed the number obtained by multiplying the Number of Granted Shares after adjustment by the maximum limit of the aggregate number of Stock Acquisition Rights as prescribed in 1. above.

 

(2)Adjustment of Number of Granted Shares

 

In the event that the Corporation conducts a stock split (including free distribution of shares (musho-wariate)) or a consolidation of the Common Stock after the date of a resolution of the Meeting, the Number of Granted Shares shall be adjusted in accordance with the following formula:

 

Number of

Granted Shares

after adjustment

=

Number of

Granted Shares

before adjustment

X

Ratio of split

or consolidation

 

Any fraction less than one (1) share resulting from the adjustment shall be disregarded.

 

(3)Amount of Assets to be Contributed upon Exercise of Stock Acquisition Rights

 

The amount of assets to be contributed upon exercise of each Stock Acquisition Right shall be the amount obtained by multiplying the amount to be paid per share to be issued or transferred upon exercise of Stock Acquisition Rights (the “Exercise Price”), which is provided below, by the Number of Granted Shares.

 

12

 

 

(i)Initial Exercise Price

 

The Exercise Price shall initially be as follows:

 

(A)Stock Acquisition Rights with Exercise Price Denominated in Yen

 

The Exercise Price shall initially be the average of the closing prices of the Common Stock in the regular trading thereof on the Tokyo Stock Exchange (each the “Closing Price”) for the ten (10) consecutive trading days (excluding days on which there is no Closing Price) immediately prior to the allotment date of such Stock Acquisition Rights (any fraction less than one (1) yen arising as a result of such calculation shall be rounded up to the nearest one (1) yen); provided, however, that if such calculated price is lower than either (a) the average of the Closing Prices for the thirty (30) consecutive trading days (excluding days on which there is no Closing Price) commencing forty-five (45) trading days immediately before the day immediately after the allotment date of Stock Acquisition Rights (any fraction less than one (1) yen arising as a result of such calculation shall be rounded up to the nearest one (1) yen), or (b) the Closing Price on the allotment date of Stock Acquisition Rights (if there is no Closing Price on such date, the Closing Price on the immediately preceding trading day), the Exercise Price shall be the higher price of (a) or (b) above.

 

(B)Stock Acquisition Rights with Exercise Price Denominated in U.S. Dollars

 

The Exercise Price shall initially be the U.S. dollar amount obtained by dividing the average of the Closing Prices for the ten (10) consecutive trading days (excluding days on which there is no Closing Price) immediately prior to the allotment date of such Stock Acquisition Rights (the “Reference Yen Price”) by the average of the exchange rate quotations by a leading commercial bank in Tokyo for selling spot U.S. dollars by telegraphic transfer against yen for such ten (10) consecutive trading days (the “Reference Exchange Rate”) (any fraction less than one (1) cent arising as a result of such calculation shall be rounded up to the nearest one (1) cent); provided, however, that if the Reference Yen Price is lower than either (a) the average of the Closing Prices for the thirty (30) consecutive trading days (excluding days on which there is no Closing Price) commencing forty-five (45) trading days immediately before the day immediately after the allotment date of Stock Acquisition Rights, or (b) the Closing Price on the allotment date of Stock Acquisition Rights (if there is no Closing Price on such date, the Closing Price on the immediately preceding trading day), the Exercise Price shall be the U.S. dollar amount obtained by dividing the higher price of (a) or (b) above by the Reference Exchange Rate (any fraction less than one (1) cent arising as a result of such calculation shall be rounded up to the nearest one (1) cent).

 

(ii)Adjustment of Exercise Price

 

In the event that the Corporation conducts a stock split (including free distribution of shares (musho-wariate)) or a consolidation of the Common Stock after the allotment date of Stock Acquisition Rights, the Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen or one (1) cent resulting from the adjustment shall be rounded up to the nearest one (1) yen or one (1) cent, respectively.

 

Exercise Price

after adjustment

=

Exercise Price

before adjustment

X

1

Ratio of split or consolidation

 

In addition, in the case of a merger with any other company, corporate split or reduction of the amount of capital of the Corporation, or in any other case similar thereto where an adjustment of Exercise Price shall be required, in each case after the allotment date of Stock Acquisition Rights, the Exercise Price shall be adjusted appropriately to the extent reasonable.

 

(4)Period during which Stock Acquisition Rights May be Exercised

 

The period during which Stock Acquisition Rights may be exercised will be the period from the day on which one (1) year has passed from the allotment date of Stock Acquisition Rights to the day on which ten (10) years have passed from such allotment date.

 

13

 

 

(5)Conditions for the Exercise of Stock Acquisition Rights

 

(i)No Stock Acquisition Right may be exercised in part.

 

(ii)

In the event of a resolution being passed at a general meeting of shareholders of the Corporation for an agreement for any consolidation, amalgamation or merger (other than a consolidation, amalgamation or merger in which the Corporation is the continuing corporation), or in the event of a resolution being passed at a general meeting of shareholders of the Corporation (or, where a resolution of a general meeting of shareholders is not necessary, at a meeting of the Board) for any agreement for share exchange (kabushiki-kokan) or any plan for share transfer (kabushiki-iten) pursuant to which the Corporation is to become a wholly-owned subsidiary of another corporation, Stock Acquisition Rights may not be exercised on and after the effective date of such consolidation, amalgamation or merger, such share exchange (kabushiki-kokan) or such share transfer (kabushiki-iten).

 

(iii)

Conditions for the exercise of Stock Acquisition Rights other than the conditions referred to above shall be determined by the Board.

 

(6)Mandatory Repurchase of Stock Acquisition Rights

 

Not applicable

 

(7)

Matters concerning the Amount of Capital and the Additional Paid-in Capital Increased by the Issuance of Shares upon Exercise of Stock Acquisition Rights

 

(i)

The amount of capital increased by the issuance of shares upon exercise of Stock Acquisition Rights shall be the amount obtained by multiplying the maximum limit of capital increase, as calculated in accordance with the provisions of Paragraph 1, Article 17 of the Company Accounting Ordinance of Japan, by 0.5, and any fraction less than one (1) yen arising as a result of such calculation shall be rounded up to the nearest one (1) yen.

 

(ii)

The amount of additional paid-in capital increased by the issuance of shares upon exercise of Stock Acquisition Rights shall be the amount obtained by deducting the capital to be increased, as provided in (i) above, from the maximum limit of capital increase, as also provided in (i) above.

 

(8)Restrictions on the Acquisition of Stock Acquisition Rights through Transfer

 

The Stock Acquisition Rights cannot be acquired through transfer, unless such acquisition is expressly approved by the Board.

 

Notes:

1.

For a summary of the Stock Acquisition Rights issued by the Corporation in the past, please refer to pages 15 to 17.  In light of the granting purpose (contributing to the improvement of the mid- and long-term business performance of the Sony Group and thereby improving such business performance of the Sony Group), the exercise of Stock Acquisition Rights is restricted during the above-mentioned period (a one-year period from the allotment date of the Stock Acquisition Rights), and the Allocation Agreement provides restrictions on the exercise of Stock Acquisition Rights such as a limitation on the number of exercisable Stock Acquisition Rights (in general, one-third of the total number of the allocated Stock Acquisition Rights will be vested and exercisable each year after the restricted period, and all of the allocated Stock Acquisition Rights will be exercisable on and after the date on which three (3) years have passed from the allotment date of the Stock Acquisition Rights), eligibility rules and others.  The Corporation intends that Stock Acquisition Rights issued by the Corporation in the future will be under the same restrictions as the Stock Acquisition Rights issued in the past.

 

2.

The maximum limit of the aggregate number of shares to be issued or transferred upon exercise of the Stock Acquisition Rights is 5,000,000, which represents 0.40 percent of the total shares outstanding as of March 31, 2020.  The total of such number of shares and the maximum aggregate number of shares to be issued or transferred upon the exercise of all outstanding stock acquisition rights for the purpose of granting stock options is 17,876,700, which represents 1.42 percent of the total shares outstanding as of March 31, 2020.

 

14

 

 

[For Reference]

 

Outline of Liability Limitation Agreement

 

Pursuant to the Articles of Incorporation, the Corporation has entered into liability limitation agreements with all non-executive Directors including outside Directors.

 

A summary of such liability limitation agreements is as follows:

 

(1)

In a case where a non-executive Director is liable to the Corporation after the execution of the liability limitation agreement for damages pursuant to Article 423, Paragraph 1 of the Companies Act, such liabilities shall be limited to the greater of either 30 million yen or an amount equal to the aggregate sum of the amounts prescribed in each item of Article 425, Paragraph 1 of the Companies Act, only where the non-executive Director acted in good faith without any gross negligence in performing his/her duties as a Director of the Corporation.

 

(2)

In a case where a non-executive Director is reelected as a non-executive Director of the Corporation and reassumes his/her office as such on the expiration of the term of his/her office as a non-executive Director of the Corporation, the liability limitation agreement shall continue to be effective after the reelection and re-assumption without any action or formality.

 

Summary of Stock Acquisition Rights (SARs) issued by the Corporation in the past (outstanding as of March 31, 2020)

 

Name

(Date of issuance)

Exercise period

Total number of SARs issued

Number of shares to be issued or transferred

Exercise price

Percentage of SARs exercised

The twentieth series of

Common Stock Acquisition Rights

(November 18, 2010)

November 18, 2011

~ November 17, 2020

646

64,600

Common Stock

¥ 2,945

87.1%

The twenty-first series of

Common Stock Acquisition Rights (November 18, 2010)

November 18, 2011

~ November 17, 2020

886

88,600
Common Stock

U.S.$ 35.48

91.4%

The twenty-second series of Common Stock Acquisition Rights (November 22, 2011)

November 22, 2012

~November 21, 2021

661

661,00
Common Stock

¥ 1,523 

90.8%

The twenty-third series of Common Stock Acquisition Rights (November 22, 2011)

November 22, 2012

~November 21, 2021

1,361

136,100
Common Stock

U.S.$ 19.44

90.4%

The twenty-fourth series of Common Stock Acquisition Rights (December 4, 2012)

December 4, 2013

~ December 3, 2022

472

47,200

Common Stock

¥ 932

92.7%

The twenty-fifth series of Common Stock Acquisition Rights (December 4, 2012)

December 4, 2013

~ December 3, 2022

1,554

155,400
Common Stock

U.S.$ 11.23

83.3%

The twenty-sixth series of Common Stock Acquisition Rights (November 20, 2013)

November 20, 2014

~ November 19, 2023

2,118

211,800
Common Stock

¥ 2,007

73.5%

  

15

 

 

Name

(Date of issuance)

Exercise period

Total number of SARs issued

Number of shares to be issued or transferred

Exercise price

Percentage of SARs exercised

The twenty-seventh series of Common Stock Acquisition Rights (November 20, 2013)

November 20, 2014

~ November 19, 2023

1,959

195,900 Common Stock

U.S.$ 20.01

77.9%

The twenty-eighth series of Common Stock Acquisition Rights (November 20, 2014)

November 20, 2015

~ November 19, 2024

3,503

350,300

Common Stock

¥ 2,410.5

57.7%

The twenty-ninth series of Common Stock Acquisition Rights (November 20, 2014)

November 20, 2015

~ November 19, 2024

2,370

237,000 Common Stock

U.S.$ 20.67

70.0%

The thirtieth series of

Common Stock Acquisition Rights (November 19, 2015)

November 19, 2016

~ November 18, 2025

4,866

486,600 Common Stock

¥ 3,404

57.2%

The thirty-first series of

Common Stock Acquisition Rights (November 19, 2015)

November 19, 2016

~ November 18, 2025

5,195

519,500 Common Stock

U.S.$ 27.51

46.0%

The thirty-second series of

Common Stock Acquisition Rights (November 22, 2016)

November 22, 2017

~ November 21, 2026

9,808

980,800 Common Stock

¥ 3,364

33.9%

The thirty-third series of

Common Stock Acquisition Rights (November 22, 2016)

November 22, 2017

~ November 21, 2026

9,712

971,200

Common Stock

U.S.$ 31.06

32.0%

The thirty-fourth series of

Common Stock Acquisition Rights (November 21, 2017)

November 21, 2018

~ November 20, 2027

12,177

1,217,700 Common Stock

¥ 5,231

10.3%

The thirty-fifth series of

Common Stock Acquisition Rights (November 21, 2017)

November 21, 2018

~ November 20, 2027

12,036

1,203,600 Common Stock

U.S.$ 45.73

13.3%

The thirty-sixth series of

Common Stock Acquisition Rights (February 28, 2018)

February 28, 2019

~ February 27, 2028

69

6,900

Common Stock

¥ 5,442

59.2%

The thirty-seventh series of

Common Stock Acquisition Rights (February 28, 2018)

February 28, 2019

~ February 27, 2028

150

15,000

Common Stock

U.S.$ 50.39

The thirty-eighth series of

Common Stock Acquisition Rights (November 20, 2018)

November 20, 2019

~ November 19, 2028

14,897

1,489,700

Common Stock

¥ 6,440

The thirty-ninth series of

Common Stock Acquisition Rights (November 20, 2018)

November 20, 2019

~ November 19, 2028

12,203

1,220,300

Common Stock

U.S.$ 56.22

4.7%

The fortieth series of

Common Stock Acquisition Rights (November 20, 2019)

November 20, 2020

~ November 19, 2029

16,596

1,659,600 Common Stock

¥ 6,705

The forty-first series of

Common Stock Acquisition Rights (November 20, 2019)

November 20, 2020

~ November 19, 2029

15,528

1,552,800 Common Stock

U.S.$ 60.99

The forty-second series of

Common Stock Acquisition Rights (April 17, 2020)

April 17, 2021

~ April 16, 2030

200

20,000

Common Stock

U.S.$ 63.75

 

Note:All series of Stock Acquisition Rights were issued for the purpose of granting stock options.  No cash payment was required for the allocation.  The forty-second series of Common Stock Acquisition Rights was issued after the fiscal year ended March 31, 2020.

 

16

 

 

(1) 

Stock Acquisition Rights held by Directors and Corporate Executive Officers of the Corporation (as of March 31, 2020)

 

Name

Directors (Excluding Outside Directors) and Corporate Executive Officers

Outside Directors

Number of shares to be issued or transferred

Number

of holders

Number of shares to be issued or transferred

Number of holders

The twentieth series of Common Stock Acquisition Rights

2,500

1

The twenty-second series of Common Stock Acquisition Rights

7,000

1

The twenty-sixth series of Common Stock Acquisition Rights

10,000

1

The twenty-eighth series of Common Stock Acquisition Rights

114,100

3

The thirtieth series of Common Stock Acquisition Rights

57,900

4

The thirty-second series of Common Stock Acquisition Rights

244,000

5

The thirty-fourth series of Common Stock Acquisition Rights

207,500

5

The thirty-eighth series of Common Stock Acquisition Rights

230,000

5

The fortieth series of Common Stock Acquisition Rights

240,000

5

 

 

 

(2) 

Stock Acquisition Rights allocated to employees and others by the Corporation during the fiscal year ended March 31, 2020

 

The details of these Stock Acquisition Rights are mentioned in the fortieth and forty-first series of Common Stock Acquisition Rights above.

 

Stock Acquisition Rights allocated to employees of the Corporation, directors, officers and employees of the Corporation’s subsidiaries

Name

Employees of the Corporation

Directors, officers and employees of the Corporation’s subsidiaries

Number of shares to be issued or transferred

Number of persons allocated

Number of shares to be issued or transferred

Number of persons allocated

The fortieth series of

Common Stock Acquisition Rights

279,800

321

1,160,400

1,110

The forty-first series of

Common Stock Acquisition Rights

4,400

2

1,595,100

895

 

Note:The Corporation resolved at a meeting of its Board of Directors held on March 26, 2020 to issue the forty-second series of Stock Acquisition Rights.  After the fiscal year ended March 31, 2020, the forty-second series of Stock Acquisition Rights was allocated on April 17, 2020 as follows:

Number of shares to be issued or transferred upon exercise of Stock Acquisition Rights:  20,000 shares

Number of persons:  1 Employee of a subsidiary of the Corporation

 

17

 

 

 

Amounts of remuneration paid to Directors and Corporate Executive Officers (for the fiscal year ended March 31, 2020)

 

 

Fixed remuneration

 

Remuneration linked to
business results

 

Phantom Restricted Stock
Plan

 

 

 

 

Number of persons 

 

 

 

Amount

 

 

 

Number of persons

 

 

 

Amount

 

 

 

Number of persons

 

 

 

Amount

 

              Million Yen               Million Yen               Million Yen  

Directors

 

 

14 (Notes 1 & 2)

 

 

 

 

210

 

 

 

 

 

 

 

— (Note 3)

 

 

 

3

 

 

 

 

94 (Note 5)

 

(Outside Directors)     (12)       (174)       ( — )       ( — )        ( 3 )        (94)  

Corporate
Executive Officers

 

 

5

 

 

 

360

 

 

 

5

 

 

 

442 (Note 4)

 

 

 

 

 

 

 

Total

 

 

19

 

 

 

570

 

 

 

5

 

 

 

442

 

 

 

3

 

 

 

94

 


Notes:

1.

The number of persons does not include 2 Directors who concurrently serve as a Corporate Executive Officer, because the Corporation does not pay any additional remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.

 

2.

The number of persons includes 3 Directors who resigned on the day of the Ordinary General Meeting of Shareholders held on June 18, 2019.

 

3.

The Corporation does not pay remuneration linked to business results to Directors who do not concurrently serve as Corporate Executive Officers.

 

4.

The amount that the Corporation plans to pay as remuneration linked to business results for the fiscal year ended March 31, 2020 will be paid in June 2020.

 

5.

The Phantom Restricted Stock Plan includes the amount that will be paid to 3 Directors who will resign on the day of the Ordinary General Meeting of Shareholders to be held on June 26, 2020.  The amount to be paid under the Phantom Restricted Stock Plan will be calculated using the market price of the Corporation’s Common Stock at the time of resignation.  The preliminary calculation for the purpose of the above table uses the market price (closing price) of the Corporation’s common stock as of March 31, 2020.

 

6.

In addition to the above, the Corporation issued restricted stock and stock acquisition rights for the purpose of granting stock options as remuneration linked to share price.  During the fiscal year ended March 31, 2020, the Corporation recorded 37 million yen in expenses for the restricted stock granted to non-executive Directors and 355 million yen in expenses for the restricted stock granted to Corporate Executive Officers.  Regarding the stock acquisition rights granted to Corporate Executive Officers, the Corporation recorded 479 million yen in expenses during the fiscal year ended March 31, 2020 or in the past for stock option purposes.

 

18

 

 

Basic policy regarding remuneration for Directors and Corporate Executive Officers

 

The basic policy regarding remuneration for Directors and Senior Executives determined by the Compensation Committee is as follows:

 

(1) Basic policy regarding Director remuneration

 

The primary duty of Directors is to supervise the performance of business operations of Sony as a whole. In order to improve this supervisory function over the business operations of Sony, which is a global company, the following two elements have established the basic policy for the determination of remuneration of Directors. No Director remuneration is paid to those Directors who concurrently serve as Corporate Executive Officers.

Attracting and retaining an adequate talent pool of Directors possessing the requisite abilities to excel in the global marketplace; and

Ensuring the effectiveness of the supervisory function of Directors.

 

Based upon the above, Director remuneration shall consist of the following three components: 

Fixed remuneration;

Remuneration linked to stock price; and

Phantom Restricted Stock Plan.

 

The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the basic policy above and based upon research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.

 

Regarding remuneration linked to stock price, restricted stock is used to further promote shared values between the shareholders and Directors, and incentivize Directors to develop and maintain a sound and transparent management system. Appropriate restrictions and conditions shall be set in order to enhance the effectiveness of the remuneration programs.

 

Regarding the Phantom Restricted Stock Plan, points determined every year by the Compensation Committee shall be granted to Directors every year during his/her tenure, and at the time of resignation, the remuneration amount shall be calculated by multiplying the common stock price by the individual’s accumulated points. Sony shall not grant any points pursuant to the Phantom Restricted Stock Plan to a Director for a fiscal year in which Sony granted restricted stock as Director remuneration to such Director.

 

(2) Basic policy regarding Senior Executive remuneration

 

Senior Executives are key members of management responsible for executing the operations of Sony as a whole, or respective businesses of Sony. In order to further improve the business results of Sony, the following two elements have established the basic policy for the determination of remuneration of Senior Executives.

Attracting and retaining an adequate talent pool possessing the requisite abilities to excel in the global marketplace; and        

Providing effective incentives to improve business results on a short-, medium- and long- term basis.

 

Based upon the above, Senior Executive remuneration shall basically consist of the following four components:

Fixed remuneration;

Remuneration linked to business results;

Remuneration linked to stock price; and

Phantom Restricted Stock Plan.

 

The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the above basic policy and the individual’s level of responsibility and based upon research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, emphasizing linking Senior Executive remuneration to business results and shareholder value.

 

19

 

 

In principle, remuneration for a Senior Executive who has a greater management responsibility and influence on Sony as a whole has a higher proportion of remuneration linked to stock price which is directly linked to the corporate value. (Please see below Reference: Executive Compensation Package Design to Focus on Long-Term Management)

 

Remuneration linked to business results shall be structured appropriately and based upon appropriate indicators to ensure that such remuneration effectively incentivizes Senior Executives to achieve the mid to long term and the corresponding fiscal year’s corporate targets. Specifically, the amount shall be determined based upon the level of achievements of the targets of (1) certain key performance indicators linked to consolidated or individual business results of Sony of the corresponding fiscal year, such as Return of Equity (“ROE”), Net Income and Operating Cash Flow (“Financial Performance KPIs”), which indicators are selected based on the areas for which each Senior Executive is responsible and (2) the individual performance of the area(s) for which each Senior Executive is responsible. The amount to be paid to Senior Executives shall fluctuate, in principle, within the range from 0 percent to 200 percent of the standard payment amount (“Business Results Linked Standard Payment Amount”) based on the achievement of the above-mentioned targets. Efforts to accelerate collaborations among Sony businesses from the viewpoint of value creation as “One Sony” as well as sustainability initiatives related to social value creation and ESG (environment, social and governance) shall be included in the evaluation factors for the individual performance. The Business Results Linked Standard Payment Amount shall be determined so that such amount is within a certain percentage of the cash compensation (total of the fixed remuneration and the remuneration linked to business results), which percentage shall be determined in accordance with each individual’s level of responsibility.

 

Remuneration linked to the stock price, such as stock options and restricted stock, will be used to incentivize Senior Executives to increase mid-to long-term shareholder value. Appropriate restrictions and conditions shall be set in order to enhance the effectiveness of such remuneration program. The amount of remuneration linked to the stock price shall be determined, so that the amount is within a certain percentage of the total cash compensation (total of the fixed remuneration and the remuneration linked to business results) and remuneration linked to the stock price.

 

       Regarding the Phantom Restricted Stock Plan, points determined every year by the Compensation Committee shall be granted to Senior Executives every year during his/her tenure in office, and at the time of resignation, the remuneration amount shall be calculated by multiplying the common stock price by the individual’s accumulated points.

 

(For Reference)

 

Executive Compensation Package Design to Focus on Long-Term Management

 

image

 

Procedures to determine the remuneration of Directors and Senior Executives

 

Based on the policy outlined above, the Compensation Committee determines the amount and content of the compensation for each Director and Senior Executive. Specifically, in principle, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic renumeration and the content of each Director’s and Senior Executive’s compensation for the corresponding fiscal year is determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director and Senior Executive is determined, including the amount of remuneration linked to business results. 

 

20

 

 

For determining the amount of the remuneration linked to business results for each Senior Executive, the Business Results Linked Standard Payment Amount, the targets for the Financial Performance KPIs and the targets for the individual performance of the areas(s) for which each Senior Executive is responsible are determined and thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the amount of such remuneration is determined based on the level of achievement of such targets for the Financial Performance KPIs and the individual performance.

 

The Compensation Committee determined the amount of compensation of each Director and Senior Executive for the fiscal year ended March 31, 2020 also according to the procedure above.

 

Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2020

 

The Business Results Linked Standard Payment Amount for the fiscal year ended March 31, 2020 was between 37.5 percent and 50.0 percent of cash compensation (total of the fixed remuneration and the remuneration linked to business results). The Financial Performance KPIs and the weighting of such Financial Performance KPIs mainly used for the Corporate Executive Officers were as follows:

 

KPI

Weight

Operating CF

50 %

Net Income

40 %

ROE

10 %

 

Operating cash flow, excluding the Financial Services Segment (“Operating CF”), was selected as a Financial Performance KPI and was weighed the highest due to operating cash flow being determined as the most important performance metric under the Third Mid-Range Plan of Sony. ROE was also selected due to it being one of the financial targets of the Sony’s Third Mid-Range Plan. Net Income was selected in order to incentivize management to achieve the current fiscal year’s corporate target.

 

For the target to be achieved for the Operating CF for the fiscal year ended March 31, 2020, an amount which the Compensation Committee determined as appropriate was set in order to achieve the Operating CF target under Sony’s Third Mid-Range Plan of 2 trillion yen or more for the three-year period from the fiscal year ended March 31, 2019. The target for the Net Income for the fiscal year ended March 31, 2020 was set as 500 billion yen, which was the forecasted amount for the Net Income for the fiscal year ended March 31, 2020 announced in April 2019. Target for ROE was 12.5% for the fiscal year ended March 31, 2020. The results for the Financial Performance KPIs for the fiscal year ended March 31, 2020 were as follows: Operating CF: 762.9 billion yen, Net Income: 582.2 billion yen, ROE: 14.8%, each exceeding the targeted amount.

 

As outlined above under “Basic policy regarding Director and Senior Executive remuneration”, remuneration linked to business results for Senior Executives for the fiscal year ended March 31, 2020 was determined based upon the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Senior Executive and the individual performance of the area(s) for which the relevant Senior Executive was responsible. The amounts to be paid to the Senior Executives were determined within the range from 0 percent to 200 percent of the Business Results Linked Standard Payment Amount. 

 

21

 

 

(For Reference)

 

Restricted Stock

 

Sony has introduced a restricted stock plan starting from the fiscal year ended March 31, 2018, pursuant to which shares of restricted stock will be allotted to Sony Corporation’s Corporate Executive Officers and other executives, and non-executive Directors of Sony Corporation (the “Non-Executive Directors”). The purpose of the plan for the Corporate Executive Officers and other executives of Sony Corporation is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve mid- to long- term performance and increase shareholder value. Furthermore, the purpose of the plan for the Non-Executive Directors is to incentivize these Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and the Non-Executive Directors.

 

The grantees will not be able to sell or transfer the granted shares during the restricted period, and Sony Corporation will acquire the granted shares from a grantee without any consideration to, or consent of, the grantee under certain conditions. Details of the plan, such as vesting conditions, eligibility and the number of grants, will be determined by the Compensation Committee.

 

Dated:  June 4, 2020

 

22