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| (Updated on September 5th, 2008)
Sony is committed to strong corporate governance. As a part of this effort, Sony adopted a "Company with Committees" corporate governance system under the Japanese Company Law. In addition to complying with the requirements of laws and regulations, Sony has introduced its own system to help improve the soundness and transparency of its governance by strengthening the separation of the Directors' function from that of management and advancing the proper functioning of the statutory committees. Under Sony's system, the Board of Directors defines the respective areas for which each of the Corporate Executive Officers is responsible and delegates to them decision-making authority to manage the business, thereby promoting the prompt and efficient management of the Sony Group. |
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Governance Structure
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(Updated on September 5th, 2008)
Sony Corporation is governed by its Board of Directors, which is appointed by resolution at the shareholders' meeting. The Board has three committees (the Nominating Committee, Audit Committee and Compensation Committee), consisting of Directors named by the Board of Directors. Corporate Executive Officers are appointed by resolution of the Board of Directors. In addition to these satutory bodies and positions, Sony has Corporate Executives who carry out business operations within designated areas.
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| Corporate Governance Structure |
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Primary Roles of the Governance Entities
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(Updated on September 5th, 2008)
Board of Directors:
- Determines the fundamental management policies of the Sony Group
- Oversees the management of Sony Group's business operations
- Appoints and dismisses the statutory committee members
- Appoints and dismisses Corporate Executive Officers
Nominating Committee:
- Determines the content of proposals regarding the appointment/dismissal of Directors
Audit Committee:
- Monitors the performance of duties by Directors and Corporate Executive Officers (with regard 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)
- Determines the content of proposals regarding the appointment/dismissal or non-reappointment of, approves the compensation of, and oversees and evaluates the work of Sony's independent auditors
- Reviews with Sony's independent auditors the scope and results of their audit, including their evaluation of Sony's internal controls, compatibility with generally accepted accounting principles in the U.S., and the overall quality of financial reporting
Compensation Committee:
- Sets policy on the contents of individual compensation for Directors, Corporate Executive Officers, Corporate Executives and Group Executives, and determines the amount and content of individual compensation of Directors and Corporate Executive Officers in accordance with the policy
Corporate Executive Officers:
- Make decisions regarding the execution of Sony Group business activities within the scope of the authority delegated to them by the Board of Directors
Corporate Executives:
- Carry out business operations within designated areas, including business units, research and development, and/or headquarters functions, in accordance with the fundamental policies determined by the Board of Directors and the Corporate Executive Officers
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Sony Initiatives
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(Updated on September 5th, 2008)
To strengthen its governance structure beyond legal requirements, Sony Corporation includes several provisions in its Charter of the Board of Directors to ensure the separation of the Board of Directors from the execution of business, and to advance the proper functioning of the statutory committees. The main provisions are as follows:
- separating the roles of the Board chairperson/vice chairperson and Representative Corporate Executive Officers;
- limiting the number of terms of outside Directors and rotating committee memberships;
- appointing chairs of statutory committees from the ranks of outside Directors;
- setting forth qualifications for Directors for the purpose of eliminating conflicts of interest and ensuring independence;
- raising the minimum number of Nominating Committee members (five or more) and requiring that at least two Directors of the Committee be Corporate Executive Officers;
- suggesting that, as a general rule, at least one Director of the Compensation Committee be a Corporate Executive Officer, while prohibiting the appointment of the CEO or COO of the Sony Group (or persons in any equivalent position) to serve on the Committee; and
- discouraging the concurrent appointment of Audit Committee members to other committees.
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Meeting Record
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(Updated on September 5th, 2008)
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% 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.) |
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Cooperation of the Audit Committee and the Internal Audit Division
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(Updated on September 5th, 2008)
Sony Corporation has an internal audit division, which coordinates closely with the internal audit departments of major subsidiaries around the world to promote Sony Group's internal audit activities on a global basis. The Sony Corporation internal audit division makes periodic presentations and submits monthly reports to the Audit Committee. To help assure its independence, the appointment and dismissal of the person in charge of the Sony Corporation internal audit division is subject to the prior approval of the Audit Committee.
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Governance Related to the U.S. Sarbanes-Oxley Act
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(Updated on September 5th, 2008)
The United States adopted the Sarbanes-Oxley Act (SOX) in 2002 in response to a series of U.S. accounting scandals and corporate governance abuses. Sony is subject to the SOX regulations because it is a foreign private issuer of equity securities registered with the U.S. Securities and Exchange Commission (SEC) and subject to SEC reporting requirements. Among other requirements, SOX requires the CEO and the CFO of Sony Corporation to sign certain certifications to accompany the Sony Annual Report on Form 20-F filed with the SEC, relating to the "fair presentation" of the consolidated financial statements, disclosure controls and procedures, and internal control over financial reporting. Sony has established "Disclosure Controls and Procedures," through which potentially material information is reported from important business units, subsidiaries, affiliated companies and corporate divisions and is reviewed and considered for disclosure in light of its materiality to the Sony Group. The "Disclosure Committee," comprised of officers and senior management of the Sony Group who oversee investor relations, accounting, corporate planning, legal, corporate communications, finance, internal audit and human resources, supervises the preparation of Sony's annual reports, current reports, quarterly earnings releases and other material disclosure, and assists the CEO, the President and the CFO in the establishment and implementation of this system and also in assuring the accuracy of financial reporting. Effective for the fiscal year ended March 31, 2007, SOX also requires the inclusion of a management report on the company's internal control over financial reporting in the Form 20-F. In order to ensure compliance with this requirement, Sony formed a cross-functional steering committee comprised of headquarters management to monitor necessary actions including documentation, testing and evaluation of controls and to perform oversight and assessment of the global evaluation. Based on their evaluation, management has concluded that Sony maintained effective internal control over financial reporting as of March 31, 2008. |
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Board of Directors' Determination Regarding Internal Control and Governance Framework
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(Updated on September 5th, 2008)
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 Japanese Company Law.
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