Japanese boards were once very large, made up of senior insiders rewarded with a director's seat. In 1997 Sony cut its 38-member board sharply and created executive officers to run the business, separating supervision from execution. Many companies copied it. Today shikko yakuin is a standard rung between bucho and the board, often with its own ranks, such as managing or senior managing executive officer.
The title is a company creation. Executive officers are appointed by the board, not by shareholders, and are not registered. They are either employees with a senior title or engaged under a mandate contract, depending on the company's design. This is different from shikkoyaku, the statutory executive officers that the Companies Act requires in companies with a nomination committee structure, who are appointed by the board and owe duties to the company much as directors do.
Executive officers usually serve one-year terms, renewed by the board.
What it means for a foreign employer
- Find out which type a candidate is. An employee-type officer has labour law protection. A mandate-type officer usually does not, and may already have been paid out their employee retirement allowance on appointment.
- The term is short. A one-year renewable appointment makes some officers open to a move, especially if reappointment looks uncertain.
- There is no exact equivalent in a subsidiary. Candidates at this level often expect a Vice President, Managing Director or country head title, and may ask about a board seat.
- Pay structures differ. Officer pay at Japanese companies may include a larger performance-linked or share-based element than at the bucho level. Get the full breakdown.
Sources
- Companies Act, Article 402 and following (statutory executive officers in companies with nomination committees).
- Sony's 1997 introduction of executive officers, as reported by Nikkei and in Sony's own governance materials.