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April 27, 2004




Stock Options (Stock Acquisition Rights)



Sony Corporation (the "Corporation") resolved at a meeting of its Board of Directors held on April 26, 2004, to propose an agenda asking for authorization to issue the stock acquisition rights outlined below, for the purpose of granting stock options, pursuant to Articles 280-20 and 280-21 of the Commercial Code of Japan. The proposal will be made at its 87th ordinary general meeting of shareholders to be held on June 22, 2004.

I    Stock Acquisition Rights for Common Stock

1.  Reason for Issue of Common Stock Acquisition Rights to Persons Other Than Shareholders without Any Consideration

The Corporation will issue the stock acquisition rights (the "Common Stock Acquisition Rights") to subscribe for shares of common stock of the Corporation ("Common Stock") to directors, corporate executive officers and employees of the Corporation and its subsidiaries without any consideration therefor pursuant to the provisions of Articles 280-20 and 280-21 of the Commercial Code of Japan upon the terms outlined below for the purposes of giving directors, corporate executive officers and employees of the Corporation and its subsidiaries an incentive to contribute towards the improvement of the business performance of the Corporation and its group companies (the "Group") and thereby improving such business performance of the Group, by making the economic interest which such directors, corporate executive officers or employees will receive correspond to the business performance of the Corporation.

2.  Terms of Issue of Common Stock Acquisition Rights

(1)   Persons to Whom Common Stock Acquisition Rights Will be Allocated

    Directors, corporate executive officers and employees of the Corporation and its subsidiaries.

(2)  Aggregate number of Common Stock Acquisition Rights

    Not exceeding 27,500.

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

    Not exceeding 2,750,000 shares of Common Stock.

    The number of shares to be issued or transferred upon exercise of each Common Stock Acquisition Right (the "Number of Granted Shares") shall be 100 shares of Common Stock.

    However, in the case that the Number of Granted Shares is adjusted pursuant to (4) below, the number of shares to be issued or transferred upon exercise of the Common Stock Acquisition Rights shall be adjusted to the number obtained by multiplying the Number of Granted Shares after adjustment by the aggregate number of the Common Stock Acquisition Rights.

(4)  Adjustment of Number of Granted Shares     In the case that the Corporation splits or consolidates the shares of Common Stock, 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 × Ratio of split or consolidation

    An adjustment above shall be made only with respect to the Number of Granted Shares for the Common Stock Acquisition Rights which have not been exercised at the time of the adjustment. Any fraction less than one (1) share resulting from the adjustment shall be disregarded.

(5)  Issue Price of Common Stock Acquisition Rights

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

(6)  Amount to be Paid In per Share to be Issued or Transferred upon Exercise of Common Stock Acquisition Rights

    The amount to be paid in per share to be issued or transferred upon exercise of the Common Stock Acquisition Right (the "Exercise Price") shall be initially as follows.

(1)  Common Stock Acquisition Rights with Exercise Price Denominated in Yen
The Exercise Price shall be the average of the closing prices of Common Stock in the regular trading thereof on the Tokyo Stock Exchange (each "Closing Price") for the ten (10) consecutive trading days (excluding days on which there is no Closing Price) immediately prior to the issue date of the Common 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 any of (i) 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 issue date of the Common 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), (ii) 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 date on which the Corporation fixes the Exercise Price (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 (iii) the Closing Price on the issue date of the Common 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 highest price of (i), (ii) and (iii) above.
(2)  Common Stock Acquisition Rights with Exercise Price Denominated in U.S. Dollars
The Exercise Price shall be the U.S. dollar amount obtained by dividing the average of the Closing Prices for ten (10) consecutive trading days (excluding days on which there is no Closing Price) immediately prior to the issue date of the Common 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 any of (i) 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 issue date of the Common Stock Acquisition Rights or (ii) 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 date on which the Corporation fixes the Exercise Price, the Exercise Price shall be the U.S. dollar amount obtained by dividing the highest price of (i) and (ii) 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).

(7)  Adjustment of Exercise Price

    In the case that the Corporation splits or consolidates the shares of Common Stock after the issue date of the Common Stock Acquisition Rights, the Exercise Price shall be adjusted in accordance with to 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.
Exercise Price after adjustment = Exercise Price before adjustment × 1
Ratio of split or consolidation

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

(8)  Period during Which Common Stock Acquisition Rights may be Exercised

    The period during which the Common Stock Acquisition Rights may be exercised will be sometime within the period from the issue date of the Common Stock Acquisition Rights to the day on which ten (10) years have passed from such issue date, which will be determined by the Board of Directors of the Corporation or the Executive Officer to whom the determination has been delegated by a resolution of the Board of Directors of the Corporation.

(9)  Conditions for Exercise of Common Stock Acquisition Rights

(1)  Each Common Stock Acquisition Right may not be exercised in part.
(2)  Other conditions for exercise shall be determined by the Board of Directors of the Corporation or the Executive Officer to whom the determination has been delegated by a resolution of the Board of Directors of the Corporation.

(10)  Mandatory Cancellation of Common Stock Acquisition Rights

    Not applicable.

(11)  Restriction on Transfer of Common Stock Acquisition Rights

    The Common Stock Acquisition Rights are non-transferable, unless such transfer is expressly approved by the Board of Directors of the Corporation.

II    Stock Acquisition Rights for Tracking Stock

1.  Reason for Issue of Tracking Stock Acquisition Rights to Persons Other Than Shareholders without Any Consideration

    The Corporation will issue the stock acquisition rights (the "Tracking Stock Acquisition Rights") to subscribe for shares of subsidiary tracking stock of the Corporation ("Tracking Stock") to directors and employees of Sony Communication Network Corporation ("SCN") without any consideration therefor pursuant to the provisions of Articles 280-20 and 280-21 of the Commercial Code of Japan upon the terms outlined below for the purposes of giving directors and employees of SCN an incentive to contribute towards the improvement of the business performance of SCN and thereby improving such business performance of SCN, by making the economic interest which such directors or employees will receive correspond to the business performance of SCN.

2.  Terms of Issue of Tracking Stock Acquisition Rights

(1)  Persons to Whom Tracking Stock Acquisition Rights Will be Allocated

    Directors and employees of SCN.

(2)  Aggregate number of Tracking Stock Acquisition Rights

    Not exceeding 455.

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

    Not exceeding 45,000 shares of Tracking Stock.

    However, on and after the Compulsory Conversion Date (as defined in Article 10-9 of the Articles of Incorporation of the Corporation, the "Compulsory Conversion Date") for the Compulsory Conversion of shares of Tracking Stock into shares of Common Stock (as defined in Article 10-9 of the Articles of Incorporation of the Corporation, the "Compulsory Conversion"), the class of shares to be issued or transferred upon exercise of the Tracking Stock Acquisition Rights shall be the Common Stock.

    The number of shares to be issued or transferred upon exercise of each Tracking Stock Acquisition Right (the "Number of Granted Shares") shall be 100 shares of Tracking Stock.

    However,in the case that the Number of Granted Shares is adjusted pursuant to (4) below, the number of shares to be issued or transferred upon exercise of the Tracking Stock Acquisition Rights shall be adjusted to the number obtained by multiplying the Number of Granted Shares after adjustment by the aggregate number of the Tracking Stock Acquisition Rights.

(4)  Adjustment of Number of Granted Shares

    In the case that an adjustment of the Exercise Price provided for in (7) below is made for any reason, the Number of Granted Shares shall be appropriately adjusted so that the amount obtained by multiplying the number of shares after adjustment by the Exercise Price after adjustment shall be equal to the amount obtained by multiplying the number of shares before adjustment by the Exercise Price before adjustment.

    An adjustment above shall be made only with respect to the Number of Granted Shares for the Tracking Stock Acquisition Rights which have not been exercised at the time of the adjustment. Any fraction less than one (1) share resulting from the adjustment shall be disregarded.

(5)  Issue Price of Tracking Stock Acquisition Rights

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

(6)  Amount to be Paid In per Share to be Issued or Transferred upon Exercise of Tracking Stock Acquisition Rights

    The amount to be paid in per share to be issued or transferred upon exercise of each Tracking Stock Acquisition Right (the "Exercise Price") shall be initially the average of the closing prices of Tracking Stock in the regular trading thereof on the Tokyo Stock Exchange (each "Closing Price") for the ten (10) consecutive trading days (excluding days on which there is no Closing Price) immediately prior to the issue date of the Tracking 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 any of (i) 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 issue date of the Tracking 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 (ii) the Closing Price on the issue date of the Tracking 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 highest price of (i) and (ii) above.

(7)  Adjustment of Exercise Price

(1)  Adjustment due to events which become effective prior to the Compulsory Conversion Date
In the case that the Corporation splits or consolidates the shares of Tracking Stock after the issue date of the Tracking Stock Acquisition Rights but prior to the Compulsory Conversion Date (excluding such date), the Exercise Price shall be adjusted in accordance with the following formula, and any fraction less than one (1) yen resulting from the adjustment shall be rounded up to the nearest one (1) yen.
Exercise Price after adjustment = Exercise Price before adjustment × 1
Ratio of split or consolidation
(2)  Adjustment due to events which become effective after the Compulsory Conversion Date
In the case that the Compulsory Conversion is made, the Excise Price shall be appropriately adjusted in accordance with the conversion ratio for the Compulsory Conversion.
In addition to the foregoing, any adjustment of the Exercise Price after the Compulsory Conversion Date shall be made in the same manner as described in (1) above with any necessary amendment by replacing Tracking Stock with Common Stock.
(3)  In addition, in the case of a merger with any other company, corporate split or capital reduction of the Corporation, or in any other case similar thereto where an adjustment of Exercise Price shall be required, in each case after the issue date of the Tracking Stock Acquisition Rights, the Exercise Price shall be appropriately adjusted to the extent reasonable.

(8)  Period during Which Tracking Stock Acquisition Rights may be Exercised

    The period during which the Tracking Stock Acquisition Rights may be exercised will be sometime within the period from the issue date of the Tracking Stock Acquisition Rights to the day on which ten (10) years have passed from such issue date, which will be determined by the Board of Directors of the Corporation or the Executive Officer to whom the determination has been delegated by a resolution of the Board of Directors of the Corporation.

    In addition, in case of the Compulsory Retirement of the shares of Tracking Stock provided for in Articles 10-7 and 10-8 of the Articles of Incorporation of the Corporation, no Tracking Stock Acquisition Right may be exercised on and after the Termination Date for such Compulsory Retirement.

(9)  Conditions for Exercise of Tracking Stock Acquisition Rights

(1)  Each Tracking Stock Acquisition Right may not be exercised in part.
(2)Other conditions for exercise shall be determined by the Board of Directors of the Corporation or the Executive Officer to whom the determination has been delegated by a resolution of the Board of Directors of the Corporation.

(10)  Mandatory Cancellation of Tracking Stock Acquisition Rights

    Not applicable.

(11)  Restriction on Transfer of Tracking Stock Acquisition Rights

    The Tracking Stock Acquisition Rights are non-transferable, unless such transfer is expressly approved by the Board of Directors of the Corporation.

Note:The issue of the stock acquisition rights mentioned above is subject to the approval by shareholders on issues of the Common Stock Acquisition Rights and the Tracking Stock Acquisition Rights to be obtained at the Corporation's 87th ordinary general meeting of shareholders scheduled for June 22, 2004. In addition, respective issues of the stock acquisition rights are further subject to the resolutions of the Board of Directors or the determination by the Executive Officer to whom the determination has been delegated by a resolution of the Board of Directors on the specific terms and conditions of such issues.