Electronics giant under pay pressure

Kansai University's Dean of Economics, who heads a shareholder activist group, may sue Sony if the world's second-largest maker of consumer electronics refuses to disclose executive salaries.

The dean, Koji Morioka, whose Shareholder Ombudsman group won a case against Sumitomo over US$2.6 billion ($4 billion) of copper trading losses, may file a lawsuit in Osaka if Sony does not comply with a request to reveal salaries for board members.

A Sony spokesman said the company was considering its response.

"The global trend among companies is to disclose more information on executive compensation, yet Japanese companies resist this," said Morioka.

"If a leading Japanese company such as Sony discloses individual board member's salaries, other companies will likely follow," he said.

According to Morioka, only two of Japan's major publicly traded companies, Tokyo Electron and Nikko Cordial disclose executive's compensation to investors.

The ombudsman group has asked Sony for the information since 2002. Sony has refused, arguing it includes the total compensation as part of management costs. Sony said it paid 2.4 billion yen ($33 million) to its board members in the year ended March.

Morioka's group was set up in 1996 with Osaka-based lawyers to push for transparency at Japanese companies and the rights of individual shareholders.

"Providing information on individual board members' compensation is favoured by investors and the media," said Nikko Cordial spokesman Kazuyoshi Aramaki.

In 1997, the ombudsman sued Tomiichi Akiyama, ex-president of Sumitomo and six other executives, seeking 200 billion yen for the company, alleging that lack of management supervision caused losses. In 2001, the Court ruled the executives should pay 430 million yen to Sumitomo.

Morioka said the group and 42 other Sony shareholders put forward the proposal for disclosure of the top five board members' compensation at the general meeting in June. It was was supported by shareholders holding a total of 46.7 per cent of Sony stock, the company said.

- BLOOMBERG