A former managing director of Microsoft Corp.'s Japan unit was sentenced Wednesday to a suspended two-year prison term and a fine of 70 million yen for failing to declare taxable income.
According to the Shizuoka District Court, Shoji Hasegawa, 53, bought shares in the U.S. firm at a predetermined price using a company stock option and later sold them for capital gains.
He avoided about 275 million yen in taxes by not reporting some 720 million yen in taxable income earned by exercising stock options in 1998 and 1999, the court found.
"The defendant hid a huge amount of income in an attempt to secure funds for his own future businesses. His motive was selfish," said presiding Judge Hiroyuki Anegawa in handing down the sentence, which was suspended for three years.
The judge said, however, that Hasegawa has shown remorse and been subject to "social punishment," referring to his damaged reputation.
Prosecutors had demanded a two-year sentence and an 80 million yen fine for violating the income tax code.
Last month, a district court in Nagano Prefecture fined and sentenced another former managing director of the company to a similar suspended sentence for tax evasion.
That court ruled that Shinji Tokutake evaded about 294 million yen in taxes by failing to declare some 836 million yen in taxable income earned through capital gains he obtained by exercising stock options.
Stock options are gaining popularity in Japan with an increasing number of firms, especially foreign ones, as an employee benefit.
Once shares are sold by exercising them, resultant capital gains must be declared as income.