Sony 2003 Annual Report Download - page 195
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Consolidated Financial Information 2003
- 109 -
which will be acquired by the exercise.
15. Pension and severance plans
Upon terminating employment, employees of Sony Corporation and its subsidiaries in Japan are entitled,
under most circumstances, to lump-sum indemnities or pension payments as described below. For employees
voluntarily retiring, under normal circumstances, minimum payment is an amount based on current rates of pay
and lengths of service. In calculating the minimum payment for employees involuntarily retiring, including
employees retiring due to meeting mandatory retirement age requirements, Sony may grant additional benefits.
With respect to directors' and statutory auditors’ resignations, lump-sum severance indemnities are calculated
using a similar formula and are normally paid subject to the approval of Sony’s shareholders.
Sony Corporation and most of its subsidiaries in Japan have contributory funded defined benefit pension
plans, which are pursuant to the Japanese Welfare Pension Insurance Law. The contributory pension plans
cover a portion of the governmental welfare pension program, under which the contributions are made by the
companies and their employees, and an additional portion representing the substituted noncontributory
pension plans. Under the contributory pension plans, the defined benefits representing the noncontributory
portion of the plans, in general, cover 60% of the indemnities under the existing regulations to employees. The
remaining indemnities are covered by severance payments by the companies. The pension benefits are
determined based on years of service and the compensation amounts, as stipulated in the aforementioned
regulations, are payable at the option of the retiring employee in a lump-sum amount or on a monthly pension.
Contributions to the plans are funded through several financial institutions in accordance with the applicable
laws and regulations.
Many of foreign subsidiaries have defined benefit pension plans or severance indemnity plans which
substantially cover all of their employees, under which the cost of benefits is currently funded or accrued.
Benefits awarded under these plans are based primarily on the current rate of pay and length of service.