Updated on August 29, 2018

The Compensation Committee

Primary role

  • Sets policy on the contents of individual compensation for Directors, Corporate Executive Officers and other officers
  • Determines the amount and content of individual compensation of Directors and Corporate Executive Officers and other Senior Executives*1 in accordance with the policy
  • *1Senior Executives: Corporate Executive Officers and certain other senior officers that assume important roles for management of Sony

Composition of the Compensation Committee

Under the Companies Act, the Compensation Committee must consist of at least three Directors, the majority of whom must be outside Directors. In addition, under the Board Charter, the chair is to be selected from among the outside Directors; provided, however, that a Director who is a CEO or a Chief Operating Officer or a Chief Financial Officer of Sony or who holds any equivalent position shall not be a member of the Compensation Committee. In determining whether to appoint or remove a member of the Compensation Committee, continuity of the Compensation Committee shall be duly taken into account. For a list of the latest members of the Compensation Committee, please refer to the page below.

Basic policy for director remuneration

The primary duty of Directors is to supervise the performance of business operations of the Sony Group 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 been established as 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 the Directors.

Based upon the above, remuneration of Directors consists of the following three components:

  • Fixed remuneration;
  • Remuneration linked to share price; and
  • Phantom Restricted Stock Plan.

The schedule for the amount of each component and its percentage of total remuneration is determined in accordance with the basic policy above. Remuneration of Directors shall be at an appropriate level determined based upon research made by a third party regarding remuneration of directors of both domestic and foreign companies.
Regarding remuneration linked to share price, restricted stock will be used to further promote shared values between the shareholders and Directors, and incentivize 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 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'sindividual's accumulated points. The resigning Director shall purchase shares of Common Stock with this remuneration.
Sony will not grant any points pursuant to the Phantom Restricted Stock Plan to Directors for a fiscal year in which Sony granted restricted stock to Directors.

Basic policy for Corporate Executive Officer remuneration

Corporate Executive Officers are key members of management responsible for executing the business operations of Sony. In order to further improve the business results of Sony, the following two elements have been established as the basic policy for the determination of remuneration of Corporate Executive Officers.

  • Attracting and retaining an adequate talent pool of Corporate Executive Officers 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, remuneration of Corporate Executive Officers shall consist of the following four components:

  • Fixed remuneration;
  • Remuneration linked to business results;
  • Remuneration linked to share price; and
  • Phantom Restricted Stock Plan.

The schedule for the amount of each component and its percentage of total remuneration shall be determined in accordance with the above basic policy with an emphasis on linking remuneration to business results and shareholder value.
Remuneration of Corporate Executive Officers shall be at an appropriate level determined based upon research made by a third party regarding remuneration of management of both domestic and foreign companies.
The basis for the schedule for the amount of each component is below.

The amount of remuneration linked to business results shall be determined based upon 1) the consolidated financial results of Sony, such as operating cash flow, net income, ROE (return on equity), for the fiscal year for which remuneration is being given, and 2) the level of achievement of business results in the business area(s) for which the relevant Corporate Executive Officer is responsible. The amount paid shall fluctuate within a range from 0 percent to 200 percent, in principle, of the standard payout amount.

Remuneration linked to the share price, such as stock options and restricted stock, will be used to incentivize executives to increase mid- to long term shareholder value. Appropriate restrictions and conditions shall be set in order to enhance the effectiveness of this program.
Regarding the Phantom Restricted Stock Plan, points determined every year by the Compensation Committee shall be granted to Corporate Executive Officers 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. The resigning Corporate Executive Officer shall purchase shares of Common Stock with this remuneration.

(For Reference)
(i) Remuneration linked to business results

The standard payout amount of remuneration linked to business results for the fiscal year ended March 31, 2019 shall be between 37.5 percent and 50.0 percent of cash compensation (fixed remuneration plus remuneration linked to business results) related to each individual's level of responsibility. The KPIs and the weighting of each KPI related to the performance of consolidated Sony shall be as follows:

KPI Weight
Operating Cash Flow 50%
Net Income 40%
ROE 10%

(ii) Restricted Stock

The Compensation Committee decided to introduce 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. Sony Corporation intends to grant shares of restricted stock to Sony Corporation's Corporate Executive Officers and other executives as a partial replacement for stock options, and to Non-Executive Directors as a partial replacement for the Phantom Restricted Stock Plan.

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