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Finance

Hirai and Stringer take pay cuts

Fri 01 Jul 2011 8:52am GMT / 4:52am EDT / 1:52am PDT
PeopleFinance

Sony bosses see pay packets and bonuses fall by up to 15 per cent

Sony Corp. CEO Howard Stringer and Sony Computer Entertainment chairman Kaz Hirai have both agreed to pay cuts following the company's third annual loss in a row.

Stringer's salary and bonuses were reduced from ¥408 million ($5.1m/€3.5m) in 2010 to ¥345 million ($4.3m/€2.9m) for the year ending March 31, 2011 - a fall of 15 per cent.

Hirai has seen his income fall from ¥110 million ($1.4m/€0.9m) to ¥101 million ($1.3m/€0.8m), excluding stock options.

Sony had previously suggested an 11 per cent pay cut for board members and executives in general. From last year all Japanese companies have been required to report executive compensation packages if they exceed ¥100 million.

"This might be a reflection of Sony’s desire to say 'we're taking a hit for this ourselves, and feel the pain as well as our shareholders and customers,'" said analyst Paul Hodgson to Bloomberg.

Following the Japanese earthquake and PlayStation Network security scandal, not to mention increasing competition from Apple and Samsung, Sony recently experienced its widest annual net loss in 16 years and admitted that its current operating profit will be eroded by around $2 billion.

3 Comments

This is very commendable, and leading from the front

Posted:3 years ago

#1

Sam Brown
Programmer

235 164 0.7
It is commendable, but look at the scale. To just about all of us a 15% pay cut would be near catastrophic, but when the difference is essentially "one less million", it becomes meaningless. Obviously I have no personal experience of this rarefied income bracket, but I can't see it making a huge difference to their lives. It's like winning £4 million rather than £5 million on the lottery - would you really care?

Now if they'd said they were taking a 100% pay cut for a year, then I would have been impressed. I know it's still only the monthly wage bill of the average size studio, but the publicity would be better. :)

(I apologise for the cynicism BTW, I know this is all meant in good faith and it's mean of me to criticise it. :)

Edited 2 times. Last edit by Sam Brown on 1st July 2011 11:33am

Posted:3 years ago

#2

Glen Elliott
Partner/Head of Sales

57 2 0.0
@Sam - I would care about the £1m difference between 4 million and 5 million! (please call me if you win £5m on the lottery!) That's a 20% pay cut which would equate to a years rent in the playboy mansion!

On a serious note, hats off to them for the big pay cut, I think all the top guys should be rewarded/penalised on company performance

But....

"Mr. Stringer , 69, a Welsh-born American citizen who joined
Sony in 1997, was made chairman and chief executive in 2005. Over
the six years that ended March 31, Sony has lost more than 37
percent of its market value. He was also granted 500,000 shares
as stock options last year, unchanged from the previous period,
according to the documents."

Be interesting to see what the strike price on his options are, personally in my own opinion, the stock is heavily undervalued (same opinion as the last 4 top tier blue chip investment houses research reports in the last week). So, say, if Mr Stringer was too turn the company around to those levels (roughly 2800 yen):

Today's close price (using today's price as the strike price for an example) - 2125 yen
Average target price - 2800 yen
Difference - 675 yen a share (8.34 usd a share) x 500,000 shares
Total Profit - $4.17million

So for Mr Stringer to commit salary hara-kiri to be the hero and not get sacked (this takes the heat off him abit) there is plenty of upside he can look forward too...as long as he doesn't blow up Sony in the next 12 months of course.

Again, majority of this are just theory's, haven't read the whole report on what stock options/strike prices/expiry of options he has.

Posted:3 years ago

#3

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