Updated on August 29, 2018

Evaluation of the Board and the Committees' Effectiveness

Policy for the Evaluation

Sony believes that it is important to endeavor to improve the effectiveness of the Board and each Committee in order to support Sony's business operations and enhance the corporate value of the Sony Group. To achieve this goal, Sony conducts evaluations of the effectiveness of the Board and of each Committee (the "Evaluation") at least annually.

Recent Evaluation

From February through April 2018, the Board conducted the Evaluation mainly in respect of the Board and Committee activities in the fiscal year ended March 31, 2018 ("FY2017") after confirming that actions proposed in response to the results of the previous Evaluation were taken. The recent Evaluation was conducted with the support of a third-party evaluation by an outside counsel having expertise in Japanese and global corporate governance practices (the "Outside Counsel") in order to ensure transparency and objectivity and to obtain professional advice.

Procedures for the Recent Evaluation

First, the Board discussed and confirmed that the actions proposed to be taken in response to the results of previous Evaluation were taken - please see "Actions in Response to the Results of the Evaluation, etc." below for certain actions taken after the previous Evaluation - and discussed and confirmed the proposed procedures for the Evaluation for FY2017. Thereafter, the third-party evaluation was conducted by the Outside Counsel in accordance with the following steps:

  • Reviewed relevant material, such as the minutes of Board meetings, and attended a Board meeting;
  • Confirmed with the Board Secretariat how meetings of the Board and Committees are conducted;
  • Gathered responses to a questionnaire from each Director about the current status and practices of the Board and each Committee, such as the composition of the Board, operation of the Board, commitments of each Director, activities of each Committee and procedures of the previous Evaluation;
  • Interviewed the Chairman of the Board, newly-appointed Directors, Chief Executive Officer and certain additional Directors about Board and Committee status and practices; and
  • Researched other global companies' practices in Japan, the United States and Europe, and compared them with Sony's practices and conducted any necessary analysis.

The Board then received, reviewed and discussed the Outside Counsel's report on the results of its evaluation. The Board confirmed the effectiveness of the Board and the Committees. The Board also discussed and confirmed proposed actions to be taken in response to the results of the Evaluation.

Summary of the Results of the Recent Evaluation

The Outside Counsel reported that the Board is established and operated in a manner sufficient to be highly appreciated, based on various points, including the self-evaluation results of the Directors and comparison with benchmarked companies in Japan, the United States and Europe. Following discussion and analysis based on the Outside Counsel's report, the Board re-affirmed that the Board and each Committee were functioning effectively as of April 2018.

The Outside Counsel also provided examples of potential options, based on other companies' practices, to help further improve effectiveness of the Board and Committees. The examples include continuously studying the feasibility of having special committees in addition to the Nominating, Compensation and Audit Committees, further enhancing the executive session’s effectiveness and expanding discussions at the Board on ESG (environment, social and governance) topics in which investors are getting more interested.

Actions in Response to the Results of the Evaluation, etc.

In order to further increase corporate value of Sony Group, Sony will aim to use the results of the Evaluation, as well as various comments and opinions given by the Directors and the Outside Counsel during the Evaluation process, to continue to improve the effectiveness of the Board and each Committee.
For reference, after the previous Evaluation, Sony and the Board took the following actions, among others, to help improve the effectiveness of the Board and each Committee:

  • Sony enhanced diversity in the boardroom (by adding one foreign and one female director, each as outside directors);
  • Sony introduced a restricted stock compensation plan;
  • The Board focused, in particular, on monitoring the cyber security-related risk management;
  • The Board especially concentrated on mid-/long-term business strategies at Directors' corporate strategic workshops with management; and
  • The Board continued to review the effect of/returns from large-size investments and M&A matters.
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