Posted by: Kenji Hall on June 20, 2008
Show me the money. That’s what investors heckled Sony’s management about at the company’s annual shareholders meeting held today in Tokyo. What were their specific demands? Raise dividends and fully disclose executive pay. But Sony’s management stood their ground.
After reporting record net profits and its second-best year of operating profits ever last fiscal year, Sony said last month that it expects to double its annual dividend payout to 50 yen (47 cents) per share this fiscal year through March 2009. Several investors complained that the low payout was at odds with the company’s stellar results. “I understand that it’s necessary to spend on R&D but it’s crazy that you can’t raise the dividend,” said one investor.
CEO Howard Stringer held firm. “The financial markets are volatile and we do need to be cautious with our balance sheet,” he told the gathering, explaining that while Sony had made a windfall from the IPO of its financial unit, part of the money would go toward product research and development.
The issue of dividends and salaries came up so many times that, when calling CFO Nobuyuki Oneda to the microphone for the fifth time, Stringer smirked as he asked, “Oneda-san, do you want to try again?” Turning to the crowd, he quipped, “He loves you.”
It was a light moment that got a laugh from the crowd thousands of shareholders who had turned out. But one person wasn’t laughing: Koji Morioka. For the sixth straight year, Morioka, who heads the Osaka-based shareholder activist group Shareholders Ombudsman, had submitted a proposal for the company to reveal the compensation packages of Sony’s top five executives. And for the sixth time Sony said no. Worse, the proposal got backing from less than 40% of shareholders, a decline from 44% the previous year. “Our goal was to top 50%, even though we would still be short of the two-thirds support needed for our proposal to pass,” Morioka told me after the meeting.
Why does Sony keep rejecting the proposal? “In Japan I believe Sony’s method of aggregate disclosure [of top executives’ compensation] in Japan is appropriate,” says Stringer, referring to the company’s policy of publicizing the total pay for 11 outside directors and for the top seven executives. The company says it paid directors a combined $15,400 and executives $195,100. “I believe the issue of disclosure of individual compensation has to be considered if it’s appropriate for Japanese culture.”