SI: Sony CEO Sir Howard Stringer’s Salary Last Year Was $4.5M

[Christopher]

The life of a CEO is not a simple one – in fact, one does not have to think very hard about how difficult it has been for Sony’s CEO, Sir Howard Stringer, throughout his last five years of serving in that role for the Japanese company. Sir Howard walked into a dream that turned into a nightmare. Despite the enormous pressure of competition eating away market share of its most popular devices, he championed transformations in the company that everyone else was too afraid to lead.

He (and Sony) never stepped down in the HD war and because of that Blu-ray won, and now the company is poised to have the same success with 3D (albeit in a much broader way). Sir Howard cuts costs, cut jobs, cut suppliers, cut manufacturing plants, and eliminated financially unsuccessful product lines. He helped develop four key initiatives: achieving consistent profitability in core hardware businesses (television, game and digital imaging); providing new user experiences that integrated innovative hardware, software and services; developing new customers and new geographic markets; and further increasing attention to environmentally conscious products and processes. Read more about CEO Sir Howard Stringer and his achievements with Sony.

In the last five years, the financial status of the company has been a rollercoaster; they posted massive annual losses for two straight years. The company booked a 40.8 billion yen loss in the year to March 2010 and a 98.9 billion yen loss a year earlier.

Sony is the first major company to reveal executive pay under a new rule requiring Japanese corporations to disclose the compensation packages of executives earning more than 100 million yen. And with this new rule, we finally learn what the CEO of one of the largest consumer electronic companies makes in a year, and what his stock options are. Read more in this WSJ article (further discussion at Bloomberg Businessweek):

Sony said Chief Executive Howard Stringer received about Y410 million ($4.5 million) in total compensation and stock options worth Y415 million during the fiscal year ended March.

The announcement is the first closely-watched disclosure of the until-now largely confidential salary details of Japan’s top executives. Recently introduced corporate disclosure rules are expected to shed light on the long-suspected gap in compensation levels between non-Japanese executives and their Japanese counterparts.

Under the Financial Services Agency’s new rules, publicly traded companies in Japan are now required to disclose the annual compensation of executives receiving Y100 million or more.

At Sony’s annual meeting with shareholders in Tokyo Friday, the company also gave the salary figures for the top three executives: Stringer, vice chairman Ryoji Chubachi and chief financial officer Nobuyuki Oneda.

Sony said Stringer’s Y410 million compensation last fiscal year consisted of about Y310 million in basic compensation and about Y100 million in bonuses. Based on the “theoretical value” of the stock options, calculated by the company, at Y813 per share, his stock options for 500,000 shares would be worth about Y406.5 million.

Sony added that about 30% of Stringer’s compensation was for his role as chief executive of Sony Corporation of America.

The compensation issue will be also closely watched at Nissan Motor Co. (7201.TO), with investors ready to scrutinize the details of chief executive Carlos Ghosn’s salary. Nissan will hold its annual shareholder meeting on Wednesday. Because both Stringer and Ghosn have held top-executive positions at overseas firms — Stringer at CBS Corp. (CBS) and Ghosn at Renault S.A. (RNO.FR) — the expectation is that their compensation will be more in line with U.S. and European standards.

“The total amount (of Stringer’s compensation) is nothing outrageous and much less than a number of top executives at large U.S. companies,” said Yuzo Fujishima, a Daiwa Institute of Research senior researcher specializing in corporate governance. “But investors will be watching how Sony will explain its policy and logic behind his salary figures.”

U.S. chief executives of companies with revenue of over Y1 trillion, or $10.9 billion, received a total compensation package nine times greater than their Japanese counterparts, according to data compiled from 2004 to 2006 by New York-based human-resources-services firm Towers Watson. European compensation was 4.4 times greater.

“In Japan, a president is just one of the executives, and most decisions are based on consensus among the entire management team,” Fujishima said. By contrast, U.S. CEOs have more power and are therefore more responsible for each decision, making their jobs “high-risk, high-return,” he added. “They can get paid a fortune if they perform well, but a failure could cost them their job.”

Stringer’s compensation was considerably higher than the other two top executives. Vice Chairman Chubachi received total compensation of about Y150 million and stock options for 80,000 shares, while CFO Oneda received total compensation of about Y140 million and a stock option for 30,000 shares. Oneda’s compensation includes about Y50 million in retirement allowances, as he is retiring from Sony this month after 41 years at the company.

Stringer said the company will include executive salary details in its annual securities report to be submitted June 28.

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