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This excerpt taken from the SNE 20-F filed Jun 23, 2009. Board
Practices
Sony Corporation has adopted a “Company with
Committees” corporate governance system under the Japanese
Companies Act (Kaishaho) and related regulations
(collectively the “Companies Act”). Under
this system, Sony Corporation has three committees: the
Nominating Committee, the Audit Committee and the Compensation
Committee. Under the Companies Act, each committee is
required to consist of not less than three Directors, the
majority of whom must be outside Directors. Under the
committee system, Directors as such have no power to execute the
business of Sony Corporation except for limited circumstances as
permitted by law. The Board of Directors must elect
Corporate Executive Officers (Shikko-yaku), who are
responsible for the execution of the business of Sony
Corporation. A summary of the governance system
adopted by Sony Corporation is set forth below.
The Board of Directors determines fundamental management policy
and other important matters related to the management of Sony
and oversees the performance of the duties of Directors and
Corporate Executive Officers. Furthermore, the Board
of Directors has the power and authority to appoint and dismiss
the members of Sony Corporation’s three committees and
Corporate Executive Officers. Under the Companies
Act, all Directors must be elected at the General Meeting of
Shareholders from the candidates determined by the Nominating
Committee. Under the Companies Act, the term of
office of Directors expires at the conclusion of the Ordinary
General Meeting of Shareholders held with respect to the last
business year ending within one year after their
election. Directors may serve any number of
consecutive terms although, under the Charter of the Board of
Directors of Sony Corporation, outside Directors may not be
reelected more than five times without the consent of all
Directors. Yotaro Kobayashi, Sakie T. Fukushima,
Yoshihiko Miyauchi and Yoshiaki Yamauchi were respectively
reelected for the sixth term as an outside Director at the
Ordinary General Meeting of Shareholders held on June 19,
2009 upon nomination by the Nominating Committee with the
consent of all Directors pursuant to the Charter of the Board of
Directors.
The Nominating Committee, which pursuant to the Charter of the
Board of Directors of Sony Corporation consists of five or more
Directors, determines the content of proposals to be submitted
for approval at the General Meeting of Shareholders regarding
the appointment and dismissal of Directors. As stated
above, under the Companies Act, a majority of the members of the
Nominating Committee must be outside Directors. In
order to qualify as an outside Director under the Companies Act,
a Director must be a person (i) who is not a director of
Sony Corporation or any of its subsidiaries engaged in the
business operations of Sony Corporation or such subsidiaries, as
the case may be, or a corporate executive officer or general
manager or other employee of Sony Corporation or any of its
subsidiaries, and (ii) who has never been a director of
Sony Corporation or any of its subsidiaries engaged in the
business operations of Sony Corporation or such subsidiaries, as
the case may be, or a corporate executive officer or general
manager or other employee of Sony Corporation or any of its
subsidiaries. Under the Charter of the Board of
Directors of Sony Corporation, at least two members of the
Nominating Committee must concurrently be Corporate Executive
Officers. The Nominating Committee is comprised of
the following members as of June 19, 2009: Yotaro
Kobayashi, who is the Chair of the Nominating Committee and an
outside Director; Yoshihiko Miyauchi, Peter Bonfield, Fujio Cho,
Yukako Uchinaga and Roland A. Hernandez, who are each outside
Directors; and Howard Stringer and Ryoji Chubachi, who are
Corporate Executive Officers.
Under the Charter of the Board of Directors of Sony Corporation,
the Audit Committee must consist of three or more Directors, a
majority of whom, as stated above, must be outside
Directors. In addition, under the Companies Act, a
member of the Audit Committee may not concurrently be a director
of Sony Corporation or any of its subsidiaries who is engaged in
the business operations of Sony Corporation or such
subsidiaries, as the case may be, or a corporate executive
officer of Sony Corporation or any of its subsidiaries, or an
accounting counselor, general manager or other employee of any
of such subsidiaries. Further, under the Charter of
the Board of Directors of Sony Corporation, members of the Audit
Committee must meet the independence and other equivalent
requirements of U.S. securities laws and regulations to the
extent applicable to Sony Corporation. The Audit
Committee’s primary responsibility is to review the
consolidated and non-consolidated financial statements and
business reports to be submitted by the Board of Directors at
the General Meeting of Shareholders; to monitor the performance
of duties by Directors and Corporate Executive Officers (with
respect to structure to ensure the adequacy of the financial
reporting process, to enable management to ensure the
effectiveness of internal control over financial reporting, to
ensure timely and appropriate disclosure and to ensure
compliance with any applicable
Table of Contents
law, Articles of Incorporation and internal policies and rules
and status of any other items described in the “Internal
Control and Governance Framework” determined or reaffirmed
by the Board of Directors in accordance with Article 416,
paragraph 1, item (1) of the Companies Act), in each
case pursuant to the Companies Act; and to propose the
appointment/dismissal or non-reappointment of, approve the
compensation of, and oversee and evaluate the work of
Sony’s independent auditor and its independence and
qualification. Under the Companies Act, the Audit
Committee has a statutory duty to prepare and submit each year
its audit report (Kansa-hokoku) to the Corporate
Executive Officer designated by the Board of
Directors. A member of the Audit Committee may note
his or her opinion in the audit report if it is different from
the opinion of the Audit Committee that is expressed in the
audit report.
The Audit Committee discusses with Sony Corporation’s
independent auditor, PricewaterhouseCoopers Aarata, the scope
and results of audits by the independent auditor including their
evaluation of Sony Corporation’s internal controls,
compatibility with Generally Accepted Accounting Principles in
the U.S., and the overall quality of financial
reporting. The Audit Committee makes an assessment of
the independence of PricewaterhouseCoopers Aarata by overseeing
their activities through regular communications and discussions
with them, and by pre-approving audit and non-audit services to
be provided. The Audit Committee is comprised of the
following members as of June 19, 2009: Yoshiaki Yamauchi,
who is the Chair of the Audit Committee and an outside Director,
and Fueo Sumita and Ryuji Yasuda, who are also outside
Directors. Both Yoshiaki Yamauchi and Fueo Sumita are
“audit committee financial experts” within the meaning
of Item 16A of this report.
As required by the Companies Act, the Compensation Committee
determines the policy and the content of compensation, bonus and
any other benefits (including equity-related rights or options
given for the purpose of stock incentive options) to be received
by each Director and Corporate Executive Officer in
consideration of the execution of their duties. In
addition to such statutory duties, the Compensation Committee
sets policy on the composition of individual compensation to be
received by other senior management of Sony Group (Directors or
other officers of Sony Group companies whose appointment is
subject to approval by the Chief Executive Officer
(“CEO”) of Sony Corporation), and also submits
proposals to the Board of Directors regarding the issuance of
stock acquisition rights for the purpose of granting stock
options and other forms of stock price-based compensation
utilizing shares etc. of Sony Group, as individual compensation
to the aforementioned senior management. Under the
Charter of the Board of Directors, the Compensation Committee
shall consist of three or more Directors, and as a general rule,
at least one member shall concurrently serve as Corporate
Executive Officer; provided, however, that a Director who is the
CEO or the COO (Chief Operating Officer) of Sony Group or in any
equivalent position shall not be a member of the Compensation
Committee. As stated above, a majority of the members
of the Compensation Committee must be outside
Directors. The Compensation Committee is comprised of
the following members as of June 19, 2009: Sakie T.
Fukushima, who is the Chair of the Compensation Committee and an
outside Director, and Mitsuaki Yahagi and Tsun-yan Hsieh, who
are also outside Directors.
During the fiscal year ended March 31, 2009, the Board of
Directors convened ten times. The Nominating
Committee met four times, the Audit Committee met 15 times and
the Compensation Committee met six times. All 12
outside Directors participated in all meetings of the Board of
Directors held during
his/her
tenure period of the fiscal year ended March 31, 2009
except for Peter Bonfield and Yukako Uchinaga. (Peter
Bonfield participated in nine meetings out of ten; Yukako
Uchinaga participated in six meetings out of
seven.) Also, all 12 outside Directors who are
members of Committees participated in at least 75 percent
of the aggregate number of meetings of each Committee held
during the fiscal year ended March 31, 2009, except for
Yoshihiko Miyauchi and Yukako Uchinaga (both of Yoshihiko
Miyauchi and Yukako Uchinaga are currently members of the
Nominating Committee and participated in two meetings out of
three held during
his/her
tenure period of the fiscal year ended March 31,
2009.) All three outside Directors who are members of
the Audit Committee participated in all meetings of the Audit
Committee held during the fiscal year ended March 31, 2009.
No Directors have executed service contracts with Sony providing
for benefits upon termination of service as a Director.
Under the Companies Act and the Articles of Incorporation of
Sony Corporation, Sony Corporation may, by a resolution of the
Board of Directors, exempt Directors from liabilities to Sony
Corporation to the extent permitted by law arising in connection
with their failure to execute their duties. Also, in
accordance with the Companies Act
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and its Articles of Incorporation, Sony Corporation has entered
into a liability limitation agreement with each outside Director
that limits the maximum amount of liabilities owed by each
outside Director to Sony Corporation arising in connection with
their failure to execute their duties 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.
The Board of Directors must appoint one or more Corporate
Executive Officers who are authorized to determine matters
delegated to them by the Board of Directors. The
Corporate Executive Officers are responsible for conducting all
the business operations of Sony within the scope of authority
delegated by the Board of Directors. As of
June 19, 2009, there are eight Corporate Executive
Officers, some of whom are also
Directors. Significant decision-making authority has
been delegated to the CEO and also to each Corporate Executive
Officer with respect to investments, strategic alliances and
other actions related to the execution of business
operations. Sony Corporation believes that this
significant delegation enables Sony to be managed in a dynamic
and responsive manner. The terms of office of
Corporate Executive Officers must expire at the conclusion of
the first meeting of the Board of Directors held immediately
after the conclusion of the Ordinary General Meeting of
Shareholders held with respect to the last business year ending
within one year after their election. From among the
Corporate Executive Officers who as a general rule are also
Directors, the Board of Directors shall elect Representative
Corporate Executive Officers. Each Representative
Corporate Executive Officer has the statutory authority to
represent Sony Corporation in the conduct of its affairs.
(Reference)
At a Board meeting held on April 26, 2006, the Board of
Directors reaffirmed the internal control and governance
framework in effect as of the date of determination and
determined to continue to evaluate and improve such framework
going forward, as appropriate. At a Board meeting
held on May 13, 2009 the Board of Directors reaffirmed such
internal control and governance framework, as slightly amended,
in effect as of the date of determination and determined to
continue to evaluate and improve such amended framework going
forward, as appropriate. This determination was
required by and met the requirements of the Companies
Act. Details of the determination are posted on the
following website:
http://www.sony.net/SonyInfo/IR/library/control.html
For an explanation as to the significant differences between the
New York Stock Exchange’s corporate governance standards
and Sony’s corporate governance practices, please refer to
“Disclosure About Differences in Corporate Governance”
in Item 16G or visit Sony’s website at:
http://www.sony.net/SonyInfo/IR/NYSEGovernance.html This excerpt taken from the SNE 20-F filed Jun 23, 2008. Board
Practices
Sony has adopted a “Company with Committees” corporate
governance system under the Japanese Company Law
(Kaishaho) and related legislation (collectively the
“Company Law”). Under this system, Sony Corporation
has three committees: the Nominating Committee, the Audit
Committee and the Compensation Committee. Under the Company Law,
each committee is required to consist of not less than three
Directors, the majority of whom must be outside Directors. Under
the committee system, Directors as such have no power to execute
the business of Sony Corporation except for limited
circumstances as permitted by law. The Board of Directors must
elect Corporate Executive Officers (Shikko-yaku), who are
responsible for the execution of the business of Sony
Corporation. A summary of the governance system adopted by Sony
Corporation is set forth below.
The Board of Directors determines fundamental management policy
and other important matters related to the management of Sony
and oversees the performance of the duties of Directors and
Corporate Executive Officers. Furthermore, the Board of
Directors has the power and authority to appoint and dismiss the
members of the above-mentioned three committees and Corporate
Executive Officers. Under the Company Law, all Directors must be
elected at the General Meeting of Shareholders from the
candidates determined by the Nominating Committee. Under the
Company Law, the term of office of Directors expires at the
conclusion of the General Meeting of Shareholders held with
respect to the last business year ending within one year after
their election. Directors may serve any number of consecutive
terms although, under the Charter of the Board of Directors of
Sony Corporation, outside Directors may not be reelected more
than five times without the consent of all Directors.
The Nominating Committee, which pursuant to the Charter of the
Board of Directors of Sony Corporation consists of five or more
Directors, determines the content of proposals to be submitted
for approval at the General Meeting of Shareholders regarding
the appointment and dismissal of Directors. As stated above,
under the Company Law, a majority of the members of the
Nominating Committee must be outside Directors. In order to
qualify as an outside Director under the Company Law, a Director
must be a person (i) who is not a director of Sony
Corporation or any of its subsidiaries engaged in the business
operations of Sony Corporation or such subsidiary, as the case
may be, or a corporate executive officer or general manager or
other employee of Sony Corporation or any of its subsidiaries,
and (ii) who has never been a director of Sony Corporation
or any of its subsidiaries engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer or general manager or other employee
of Sony Corporation or any of its subsidiaries. Under the
Charter of the Board of Directors of Sony Corporation, at least
two members of the Nominating Committee must concurrently be
Corporate Executive Officers. The Nominating Committee is
comprised of the following members as of June 20, 2008:
Yotaro Kobayashi, who is the Chair of the Nominating Committee
and an outside Director; Yoshihiko Miyauchi, Peter Bonfield,
Fujio Cho, Yukako Uchinaga and Roland A. Hernandez who are each
outside Directors; and Howard Stringer and Ryoji Chubachi, who
are Corporate Executive Officers.
Under the Charter of the Board of Directors of Sony Corporation,
the Audit Committee must consist of three or more Directors, a
majority of whom, as stated above, must be outside Directors. In
addition, under the Company Law, a member of the Audit Committee
may not concurrently be a director of Sony Corporation or any of
its subsidiaries who is engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer of Sony Corporation or any of its
subsidiaries, or an accounting counselor, general manager or
other employee of any of such subsidiaries. Further, under the
Charter of the Board of Directors of Sony Corporation, members
of the Audit Committee must meet the independence and other
equivalent requirements of U.S. securities laws and
regulations to the extent applicable to Sony Corporation. The
Audit Committee’s primary responsibility is to review the
consolidated and non-consolidated financial statements and
business reports to be submitted by the Board of Directors at
the General Meeting of Shareholders; to monitor the performance
of duties by Directors and Corporate Executive Officers (with
respect to the preparation process of financial statements,
Table of Contents
disclosure controls and procedures, internal controls,
compliance structure, risk management structure, internal audit
structure, internal hotline system and other matters), in each
case pursuant to the Company Law; and to propose
appointment/dismissal or non-reappointment of, approve the
compensation of, and oversee and evaluate the work of
Sony’s independent auditor. Under the Company Law, the
Audit Committee has a statutory duty to prepare and submit each
year its audit report to the Corporate Executive Officer
designated by the Board of Directors. A member of the Audit
Committee may note his or her opinion in the audit report if it
is different from the opinion of the Audit Committee that is
expressed in the audit report.
The Audit Committee discusses with Sony Corporation’s
independent auditor, PricewaterhouseCoopers Aarata, the scope
and results of audits by the independent auditor including their
evaluation of Sony Corporation’s internal controls,
compatibility with Generally Accepted Accounting Principles in
the U.S., and the overall quality of financial reporting. The
Audit Committee makes an assessment of the independence of
PricewaterhouseCoopers Aarata by overseeing their activities
through regular communications and discussions with them, and by
pre-approving audit and non-audit services to be provided. The
Audit Committee is comprised of the following members as of
June 20, 2008: Yoshiaki Yamauchi, who is the Chair of the
Audit Committee and an outside Director; and Fueo Sumita and
Ryuji Yasuda, who are also outside Directors. Both Yoshiaki
Yamauchi and Fueo Sumita are “audit committee financial
experts” within the meaning of Item 16A of this report.
As required by the Company Law, the Compensation Committee
determines the policy and the content of compensation, bonus and
any other benefits (including equity-related rights or options
given for the purpose of stock incentive options) to be received
by each Director and Corporate Executive Officer in
consideration of the execution of their duties. In addition to
such statutory duties, the Compensation Committee sets policy on
the composition of individual compensation to be received by
other senior management of Sony Group (Directors or other
officers of Sony Group companies whose appointment is subject to
approval by the Chief Executive Officer (“CEO”) of
Sony Corporation), and also submits proposals to the Board of
Directors regarding the issuance of stock acquisition rights for
the purpose of granting stock options and other forms of stock
price-based compensation utilizing shares etc. of Sony Group, as
individual compensation to the aforementioned senior management.
Under the Charter of the Board of Directors, the Compensation
Committee shall consist of three or more Directors, and as a
general rule, at least one member shall concurrently serve as
Corporate Executive Officer; provided, however, that a Director
who is the CEO or the COO (Chief Operating Officer) of Sony
Group or in any equivalent position shall not be a member of the
Compensation Committee. As stated above, a majority of the
members of the Compensation Committee must be outside Directors.
The Compensation Committee is comprised of the following members
as of June 20, 2008: Sakie T. Fukushima, who is the Chair
of the Compensation Committee and an outside Director; Mitsuaki
Yahagi and Tsun-yan Hsieh who are also outside Directors.
During the fiscal year ended March 31, 2008, the Board of
Directors convened nine times. The Nominating Committee met five
times, the Audit Committee met 15 times and the Compensation
Committee met five times. All 11 outside Directors participated
in all meetings of the Board of Directors held during
his/her
tenure period of the fiscal year ended March 31, 2008
except for Mr. Yoshihiko Miyauchi, Mr. Fujio Cho, and
Mr. Ned Lautenbach. (Mr. Yoshihiko Miyauchi
participated in seven meetings out of nine; Mr. Fujio Cho
participated in eight meetings out of nine; Mr. Ned
Lautenbach participated in two meetings out of five and resigned
from his post on September 4, 2007.) Also, all 10 outside
Directors who are members of Committees participated in at least
75 percent of the aggregate number of meetings of each
Committee held during the fiscal year ended March 31, 2008.
All four outside Directors who are members of the Audit
Committee participated in all meetings of the Audit Committee
held during
his/her
tenure period of the fiscal year ended March 31, 2008
except for Mr. Ryuji Yasuda. (Mr. Ryuji Yasuda
participated in nine meetings out of eleven.)
No Directors have service contracts with Sony providing for
benefits upon termination of service as a Director.
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may, by a resolution of the Board
of Directors, exempt Directors from liabilities to Sony
Corporation to the extent permitted by law arising in connection
with their failure to execute their duties. Also, in accordance
with the Company Law and its Articles of Incorporation, Sony
Corporation has entered into a liability limitation agreement
with each outside Director that limits the maximum amount of
liabilities owed by each outside Director to Sony Corporation
Table of Contents
arising in connection with their failure to execute their duties
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 Company Law.
The Board of Directors must appoint one or more Corporate
Executive Officers who are authorized to determine matters
delegated to them by the Board of Directors. The Corporate
Executive Officers are responsible for conducting all the
business operations of Sony within the scope of authority
delegated by the Board of Directors. As of June 20, 2008,
there are 7 Corporate Executive Officers, some of whom are also
Directors. Significant decision-making authority has been
delegated to the CEO and also to each Corporate Executive
Officer with respect to investments, strategic alliances and
other actions related to the execution of business operations.
Sony Corporation believes that this significant delegation
enables Sony to be managed in a dynamic and responsive manner.
The terms of office of Corporate Executive Officers must expire
at the conclusion of the first meeting of the Board of Directors
held immediately after the conclusion of the General Meeting of
Shareholders held with respect to the last business year ending
within one year after their election. From among the Corporate
Executive Officers who as a general rule are also Directors, the
Board of Directors shall elect Representative Corporate
Executive Officers. Each Representative Corporate Executive
Officer has the statutory authority to represent Sony
Corporation in the conduct of its affairs.
(Reference)
At a Board meeting held on April 26, 2006, the Board of
Directors reaffirmed the existing internal control and
governance framework and determined to continue to evaluate and
improve such framework going forward, as appropriate. This
determination was required by and met the requirements of the
Company Law.
Details of the determination are posted on the following website:
http://www.sony.net/SonyInfo/IR/library/control.html
For an explanation as to the significant differences between the
New York Stock Exchange’s corporate governance standards
and Sony’s corporate governance practices, please visit
Sony’s website at:
http://www.sony.net/SonyInfo/IR/NYSEGovernance.html
This excerpt taken from the SNE 20-F filed Jun 22, 2007. Board
Practices
Sony has adopted a “Company with Committees” corporate
governance system under the Japanese Company Law
(Kaishaho) and related legislation (collectively the
“Company Law”). Under this system, Sony Corporation
has three committees: the Nominating Committee, the Audit
Committee and the Compensation Committee. Under the Company Law,
each committee is required to consist of not less than three
Directors, the majority of whom must be outside Directors. Under
the committee system, Directors as such have no power to execute
the business of Sony Corporation except for limited
circumstances as permitted by law. The Board of Directors must
elect Corporate Executive Officers (Shikko-yaku), who are
responsible for the execution of the business of Sony
Corporation. A summary of the governance system adopted by Sony
Corporation is set forth below.
The Board of Directors determines fundamental management policy
and other important matters related to the management of Sony
and oversees the performance of the duties of Directors and
Corporate Executive Officers. Under the Company Law, all
Directors must be elected at the General Meeting of Shareholders
from the candidates determined by the Nominating Committee.
Under the Company Law, the term of office of Directors expires
at the conclusion of the General Meeting of Shareholders held
with respect to the last business year ending within one year
after their election. Directors may serve any number of
consecutive terms although, under the Charter of the Board of
Directors of Sony Corporation, outside Directors may not be
reelected more than five times without the consent of all
Directors.
The Nominating Committee, which pursuant to the Charter of the
Board of Directors of Sony Corporation consists of five or more
Directors, determines the content of proposals to be submitted
for approval at the General Meeting of Shareholders regarding
the appointment and dismissal of Directors. As stated above,
under the Company Law, a majority of the members of the
Nominating Committee must be outside Directors. In order to
qualify as an outside Director under the Company Law, a Director
must be a person (i) who is not a director of Sony
Corporation or any of its subsidiaries engaged in the business
operations of Sony Corporation or such subsidiary, as the case
may be, or a corporate executive officer or general manager or
other employee of Sony Corporation or any of its subsidiaries,
and (ii) who has never been a director of Sony Corporation
or any of its subsidiaries engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer or general manager or other employee
of Sony Corporation or any of its subsidiaries. Under the
Charter of the Board of Directors of Sony Corporation, at least
two members of the Nominating Committee must concurrently be
Corporate Executive Officers. The Nominating Committee is
comprised of the following members as of June 21, 2007:
Yotaro Kobayashi, who is the Chairman of the Nominating
Committee and an outside Director; Hirobumi Kawano, Peter
Bonfield and Fujio Cho, who are outside Directors; and Howard
Stringer and Ryoji Chubachi, who are Corporate Executive
Officers.
Under the Charter of the Board of Directors of Sony Corporation,
the Audit Committee must consist of three or more Directors, a
majority of whom, as stated above, must be outside Directors. In
addition, under the Company Law, a member of the Audit Committee
may not concurrently be a director of Sony Corporation or any of
its subsidiaries who is engaged in the business operations of
Sony Corporation or such subsidiary, as the case may be, or a
corporate executive officer of Sony Corporation or any of its
subsidiaries, or an accounting counselor, general manager or
other employee of any of such subsidiaries. Further, under the
Charter of the Board of Directors of Sony Corporation, members
of the Audit Committee must meet the independence and other
equivalent requirements of U.S. securities laws and
regulations to the extent applicable to Sony Corporation. The
Audit Committee’s primary responsibility is to review the
consolidated and non-consolidated financial statements and
business reports to be submitted by the Board of Directors at
the General Meeting of Shareholders; to monitor the performance
of duties by Directors and Corporate Executive Officers (with
respect to the preparation process of financial statements,
disclosure controls and procedures, internal controls,
compliance structure, risk management structure, internal audit
structure, internal hotline system and other matters), in each
case pursuant to the Company Law; and to propose
appointment/dismissal or non-reappointment of, approve the
compensation of, and oversee and evaluate the work of
Sony’s independent auditor. Under the Company Law, the
Audit Committee has a statutory duty to prepare and submit each
year its audit report to the Corporate Executive Officer
designated by the Board of Directors. A member of the Audit
Committee may note his or her opinion in the audit report if it
is different from the opinion of the Audit Committee that is
expressed in the audit report.
Table of Contents
The Audit Committee discusses with Sony Corporation’s
independent auditor, PricewaterhouseCoopers Aarata, the scope
and results of audits by the independent auditor including their
evaluation of Sony Corporation’s internal controls,
compatibility with Generally Accepted Accounting Principles in
the U.S., and the overall quality of financial reporting. The
Audit Committee makes an assessment of the independence of
PricewaterhouseCoopers Aarata by overseeing their activities
through regular communications and discussions with them, and by
pre-approving audit and non-audit services to be provided. The
Audit Committee is comprised of the following members as of
June 21, 2007: Yoshiaki Yamauchi, who is the Chairman of
the Audit Committee and an outside Director; and Fueo Sumita and
Ryuji Yasuda, who are also outside Directors. Both Yoshiaki
Yamauchi and Fueo Sumita are “audit committee financial
experts” within the meaning of Item 16A of this report.
As required by the Company Law, the Compensation Committee
determines the policy and the contents of compensation, bonus
and any other benefits (including equity-related rights or
options given for the purpose of stock incentive options) to be
received by each Director and Corporate Executive Officer in
consideration of the execution of their duties. In addition to
such statutory duties, the Compensation Committee sets policy on
the composition of individual compensation to be received by
other senior management of Sony Group (Directors or other
officers of Sony Group companies whose appointment is subject to
approval by the Chief Executive Officer (“CEO”) of
Sony Corporation), and also submits proposals to the Board of
Directors regarding the issuance of stock acquisition rights for
the purpose of granting stock options and other forms of stock
price-based compensation utilizing shares etc. of Sony Group, as
individual compensation to the aforementioned senior management.
Under the Charter of the Board of Directors, the Compensation
Committee shall consist of three or more Directors, and as a
general rule, at least one member shall concurrently serve as
Corporate Executive Officer; provided, however, that a Director
who is the CEO or the COO (Chief Operating Officer) of Sony
Group or in any equivalent position shall not be a member of the
Compensation Committee. As stated above, a majority of the
members of the Compensation Committee must be outside Directors.
The Compensation Committee is comprised of the following members
as of June 21, 2007: Akishige Okada, who is the Chairman of
the Compensation Committee and an outside Director; and
Yoshihiko Miyauchi and Sakie T. Fukushima,who are also outside
Directors.
During the fiscal year ended March 31, 2007, the Board of
Directors convened 8 times. The Nominating Committee met 5
times, the Audit Committee met 14 times and the Compensation
Committee met 6 times. In the fiscal year ended March 31,
2007, no incumbent Director attended less than 75 percent
of the aggregate number of meetings of the Board and Committees
on which
he/she
served (during the period that
he/she
served).
No Directors have service contracts with Sony providing for
benefits upon termination of service as a Director.
Under the Company Law and the Articles of Incorporation of Sony
Corporation, Sony Corporation may, by a resolution of the Board
of Directors, exempt Directors from liabilities to Sony
Corporation to the extent permitted by law arising in connection
with their failure to execute their duties. Also, in accordance
with the Company Law and its Articles of Incorporation, Sony
Corporation has entered into a liability limitation agreement
with each outside Director that limits the maximum amount of
their liabilities owed to Sony Corporation arising in connection
with their failure to execute their duties 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 Company Law.
The Board of Directors must appoint one or more Corporate
Executive Officers who are authorized to determine matters
delegated to them by the Board of Directors. The Corporate
Executive Officers are responsible for conducting all the
business operations of Sony within the scope of authority
delegated by the Board of Directors. As of June 21, 2007,
there are 7 Corporate Executive Officers, some of whom are also
Directors. Significant decision-making authority has been
delegated to the CEO and also to each Corporate Executive
Officer with respect to investments, strategic alliances and
other actions related to the execution of business operations.
Sony Corporation believes that this significant delegation
enables Sony to be managed in a dynamic and responsive manner.
The terms of office of Corporate Executive Officers must expire
at the conclusion of the first meeting of the Board of Directors
held immediately after the conclusion of the General Meeting of
Shareholders held with respect to the last business year ending
within one year after their election. From among the Corporate
Executive Officers who as a general rule are also Directors, the
Board of Directors shall elect Representative Corporate
Executive Officers. Each Representative Corporate Executive
Officer has the statutory authority to represent Sony
Corporation in the conduct of its affairs.
Table of Contents
(Reference)
At a Board meeting held on April 26, 2006, the Board of
Directors reaffirmed the existing internal control and
governance framework and determined to continue to evaluate and
improve such framework going forward, as appropriate. This
determination was required by and met the requirements of the
Company Law.
Details of the determination are posted on the following website:
http://www.sony.net/SonyInfo/IR/library/control.html
For an explanation as to the significant differences between the
New York Stock Exchange’s corporate governance standards
and Sony’s corporate governance practices, please visit
Sony’s website at:
http://www.sony.net/SonyInfo/IR/NYSEGovernance.html
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