TOKYO (TR) – The maker of Hello Kitty, Sanrio Co., announced last week that a managing director has resigned after a probe revealed he quietly pocketed more than 250 million yen in unauthorized compensation from a U.S. subsidiary he oversaw, reports the Nikkei Shimbun (May 29).
The company said on May 29 that the disgraced executive received a total of 252.3 million yen in cash spread out over more than a dozen illicit payments. The money was completely separate from his official salary, which had been set by the company’s nomination and compensation advisory committee.
A special investigative committee — comprised of outside directors, external lawyers, and certified public accountants — uncovered a shocking lack of oversight at the US branch. The committee concluded that the subsidiary’s own compensation board was practically dysfunctional, noting that millions of yen were handed over based on nothing more than “informal discussions” and “oral approvals” among local executives.
The probe also blasted Sanrio’s Tokyo headquarters for turning a blind eye, citing a severely inadequate system for monitoring and managing the total compensation its executives were raking in across its global network.
In an act of contrition over the scandal, Sanrio President Tomokuni Tsuji will surrender 30 percent of his monthly salary for three months, while a senior managing director will take a 10 percent pay cut for one month.
The illicit payout scheme has thrown the entertainment giant’s bookkeeping into chaos. Sanrio has postponed the release of its consolidated financial results, originally slated for May 13, pushing the announcement to late June.
Due to the delay in preparing the necessary financial documents, the company will also be forced to hold an unprecedented continuation session following its annual general shareholders’ meeting on June 25. The exact date of the follow-up meeting remains undecided.v
