Corporate Governance
Rakuten's Approach
Our corporate mission since founding is based on the empowerment of individuals and society through innovation and entrepreneurship. We contribute to social
innovation and enrichment by boosting the growth of as many people as possible, while providing services that ensure a high standard of satisfaction for both
users and partner enterprises.
To achieve this, the Group has been implementing various measures by making rigorous corporate governance its highest
priority.
For the details on Rakuten’s corporate governance, please see the
Corporate Governance Report
submitted to Tokyo Stock Exchange on April 28th, 2023.
Management System
Rakuten has adopted a company with an Audit & Supervisory Board structure, in which highly independent Audit & Supervisory Board Members provide auditing
functions in order to improve the transparency of the Company’s management and ensure its appropriateness, efficiency, fairness, and soundness. The Company has
supervised management through an Audit & Supervisory Board, where a majority of the members are Outside Audit & Supervisory Board Members. Additionally, in
order to separate the supervisory and executive roles of management, the Company has adopted an Executive Officer System in which the Board retains
responsibility for management decision-making and supervision, while Executive Officers are responsible for executive functions.
The Company’s Board of
Directors, which includes Outside Directors who are highly independent experts from a variety of fields, supervises the execution of business from an objective
perspective and engages in casual and multilateral discussions on management. Furthermore, the Company holds meetings, where debates are held about Group
management strategy, etc., separately from the meetings of the Board of Directors. Participants discuss matters from a medium- to long-term perspective rather
than confining themselves to short-term issues or items discussed at the meetings of the Board of Directors, thereby enhancing the effectiveness of corporate
governance. In addition, we have introduced an internal Company System to ensure agile business execution and clear accountability.
Through such efforts,
Rakuten Group will continue to build a management structure with more highly effective governance functions that enables swift management decisions.
Board of Directors
The Company makes determinations and decisions via board resolution about matters that are legally required to be resolved at the Board of Directors, as well as about strategically important matters that the Company has deemed should be resolved by the Board. These items are stipulated in the Rakuten Group Authority Table, which includes matters related to Finance, M&A, Assets, Accounting, Annual Budget and Business Plan, Cost Expenditure, Human Resources, Intellectual Property, Organizations and Information security. Similarly, approving authority is entrusted to the CEO and the executive officers responsible for Company, and stipulated in the Rakuten Group Authority Table.
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Audit & Supervisory Board
The purpose of the Audit & Supervisory Board is to receive reports, hold discussions, and make decisions regarding important audit-related matters. However, it does not prevent each Audit & Supervisory Board Member from exercising their individual authority.
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Effectiveness of the Board and Audit & Supervisory Board
To enhance effectiveness of the Board of Directors, the Company carried out an annual survey among all of the Directors and the Audit & Supervisory Board
Members from December 2022 to January 2023 about the operation of the Board meetings and the composition of the Board of Directors, and the results were
reported to the Board of Directors in February 2023.
Through the survey the effectiveness of the Board of Directors was generally confirmed. The Company
will continue to work to improve the Board to enhance its effectiveness.
Directors
Rakuten’s Board of Directors at a Glance
Details of the Directors
Executive Compensation
Basic Policies
The compensation for the Company’s Directors is determined based on the following basic policies.
For executive Directors, a level of compensation that is
globally competitive is set to secure and maintain excellent human resources. The portion of share options is designed to be high to promote sustainable growth
of the Company by improving medium- to long-term corporate value and achieving management goals. For non-executive Directors, a level of compensation that is
globally competitive is set to secure and maintain excellent human resources who will support management with global expertise.
Compensation Structure
The compensation of executive Directors comprises the followings:
- Basic compensation (fixed, monthly payment)
- Performance-linked compensation (performance-linked bonuses as short-term incentive compensation, annual payment)
- Non-cash based compensation (stock-based compensation stock option as medium- to long-term incentive compensation, annual payment)
Additionally, the ratio of basic compensation, performance-linked compensation, and non-cash-based compensation is set based on the position and role of each Executive Director.
The compensation of the Non-executive Directors and Outside Directors who are independent of business execution comprises the followings:
- Basic compensation (fixed, monthly payment)
- Non-cash based compensation (stock-based compensation stock option as medium- to long-term incentive compensation, annual payment)
The ratio of basic compensation, performance-linked compensation and non-cash based compensation is set based on the role of each Director.
Type of Compensation |
Method of Determination |
Maximum Amount of Compensation per year |
|
---|---|---|---|
Executive Directors |
a) Basic compensation (fixed, monthly payment) | The ratio of basic compensation, performance-linked compensation and non-cash based compensation is set based on position and role of each executive Director. |
Cash based compensation: 1.2 billion yen Non-cash based compensation: Share options 10,000 |
b) Performance-linked compensation (performance-linked bonuses as short-term incentive compensation, annual payment) | |||
c) Non-cash based compensation (stock-based compensation stock option as medium- to long-term incentive compensation, annual payment) | |||
Non-executive Directors |
Fixed monthly amount | Paid only basic remuneration that is not affected by fluctuations in the Company’s operating performance. | |
Outside Directors |
200 million yen |
Indicators and Method of Calculation
To increase awareness of the development and expansion of the Rakuten Ecosystem, multiple KPIs such as consolidated operating income (loss) of each fiscal year
have been selected for performance-linked compensation and non-cash based compensation. They are linked to growth and profitability. Individual evaluations are
determined based on the achievement of targets for the indicator set by the managing organization of each Director. The amount paid is determined based on
individual evaluations and overall company performance.
For Non-executive Directors and Outside Directors, performance-linked compensation is not
applicable. There are no indicators for non-cash based compensation. The Company has decided that a percentage of the total amount of compensation for each
Non-executive Director and Outside Director shall be non-cash compensation determined based on the role of each non-executive director and outside director.
Determination Process
The Company’s Board of Directors resolves the compensation policy for Directors after providing explanations to Independent Outside Directors and obtaining
their appropriate advice. Other decision-making processes are also explained to the Independent Outside Directors at the Board of Directors as necessary, and
appropriate advice is obtained.
The amount of individual compensation for Directors is determined by Hiroshi Mikitani, the Representative Director,
Chairman, President & CEO, who is delegated this authority by the Board of Directors within the compensation limit determined at the general shareholders’
meeting and in accordance with the compensation policy. He evaluates the business each Director is in charge of while considering the Company’s overall
performance and obtaining advice from Outside Directors as necessary to determine the amount of individual compensation. Thus, the Board of Directors believes
that the content of individual compensation, etc. is in line with the compensation policy.