Rakuten, Inc. (the “Company”) announces that at the meeting of the Board of Directors held today, it resolved to issue the following Share Options as stock options to Directors, Executive Officers and Employees of the Company and the Company’s subsidiaries on March 1, 2018, pursuant to "Issuance of Share Options as Stock Options", approved at the 20th Annual General Shareholders’ Meeting held on March 30, 2017
1. The reason for issuing the Share Options on especially favorable conditions
Since the value of the Share Options is linked with the Company’s stock price, delivering the Share Options as part of a performance-linked compensation package to the executives and employees of the Group will allow the executives and employees of the Group to share the gains of shareholders when stock prices rise, and also causes them to feel shareholders’ losses when stock prices fall, thus enhancing their motivation to achieve higher performance and higher stock prices.
In addition, the exercise period of a portion of the Share Options shall commence on the date on which one year has passed from the issuance of the Share Options, while the proportion of the Share Options, which may be exercised, shall increase gradually in stages until the date prior to the date on which four years have passed from the issuance, with the rest of the Share Options becoming exercisable thereafter. By making the stock options exercisable in stages in such a way, it will be possible to exercise the Share Options on the date on which one year has passed from the issuance of the Share Options, which will offer an attractive compensation package to prospective recruits to the Group, especially in countries and regions where the competition for talented human resources is intense. On the other hand, by making a portion of the Share Options exercisable gradually in stages until the date prior to the date on which four years have passed from the issuance, it will be possible to further raise the incentive of the Group towards higher performance and higher stock prices in the long term and retain existing talented staff.
The Company intends to implement stock option plans for the executives and employees of the Group for the purpose of continuous enhancement of the Group’s corporate and shareholder values by recruiting and retaining talented staff and by raising the motivation of the executives and employees of the Group towards higher performance.
[Determination Methods and Main Features of the Group’s Compensation System]
In the determination of the total amount of compensation, including the granting of the Share Options, factors such as the degree to which the Group’s operating profit targets were achieved; the business performance of each Group company, business segment or division; and the personnel evaluation of each individual are taken into account.
In addition, the Group has designed its compensation system so that, as a general rule, the higher the rank of and the larger the role played by an individual, the larger the bonus linked to the performance of each Group company, business segment or division, and to the performance of the individual, and the larger the proportion of the stock options linked to stock prices. Nevertheless, a major feature of the Group’s compensation system is that it delivers Share Options to a wide range of personnel starting with second-year employees with relatively small ranks and roles up to the Directors. This reflects the Group’s belief that by making the majority of its executives and employees potential shareholders, it will further raise the awareness of each executive and employee towards enhancing corporate and shareholder values, as well reinforce the sense of unity among the Group members, which is thought to be an indispensable element in expanding and fostering the “Rakuten Eco-System” both in Japan and abroad..