Sony 2003 Annual Report Download - page 76

Sony Corporation Annual Report 200374
Revolutionizing Corporate Governance
At the Ordinary General Meeting of Shareholders held
on June 20, 2003, shareholders approved an amend-
ment to Sony Corporation’s Articles of Incorporation
transforming Sony into a “Company with Committees,”
a new corporate governance system under the
Japanese Commercial Code. As a result, Sony has
terminated its Statutory Auditors and Board of Statutory
Auditors system. In its place, Sony has established three
committees (the Nominating Committee, Audit
Committee and Compensation Committee) each of
which consists of a majority of outside Directors.
At the Ordinary General Meeting of Shareholders,
17 Directors, including eight outside Directors, were
elected. Immediately after the meeting, the newly
elected Directors met to name members of the three
committees and twelve Corporate Executive Officers,
three of whom are Representative Corporate Executive
Officers. At this board meeting, the Directors also
adopted regulations, including Sony’s own rules for
bolstering corporate governance, for the Board of
Directors and its committees.
These revisions to Sony’s corporate governance are
aimed at strengthening the ability of the Board of
Directors to oversee operations while facilitating
delegation of greater authority and responsibility for
the execution of business activities. The objective of
these changes is to manage the Sony Group with
greater soundness, transparency and speed.
Corporate Governance
Reforms to Strengthen Corporate Governance
Adoption of the “ Company with Committees”
System: From time to time in the past, Sony has taken
measures on its own within the scope of Japan’s
Commercial Code to clearly separate the roles of
corporate oversight and business execution and to
enhance its unique corporate governance scheme. One
example was the introduction of Sony’s own corporate
executive officer (“Shikko-yakuin”) system. The previous
Commercial Code was structured under the premise
that directors would also serve as management in
charge of certain business operations. An amendment
to the Commercial Code, which took effect on April 1,
2003, gave companies the option of adopting a
“Company with Committees” system under which the
Board of Directors was clearly positioned as a supervisory
body, while the corporate executive officer (“Shikko-
yaku”) position was officially established for the execu-
tion of business activities. Consistent with corporate
governance measures taken thus far, Sony decided that
adopting the “Company with Committees” system
would be the best means to strengthen the supervisory
role of the Board of Directors and delegate greater
authority and responsibility to executives in charge of
business operations.
Significant Corporate Governance Measures
1970 Established outside Director system
1976 Adopted position of Chief Executive Officer
1983 Adopted business unit system
1991 Elected first non-Japanese (outside) Director
1994 Adopted in-house company system
1997 Introduced corporate executive officer (“Shikko-
yakuin”) system
1998 Established compensation and nominating
committees
1999 Established network company system
2000 Separated the duties of the Chairman of the
Board and the head of corporate executive
officers
2002 Established Advisory Board
2003 Moved to the “Company with Committees”
system