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 Rakuten, Inc. and the Company’s subsidiaries on August 1st, 2018, pursuant to “Issuance of Share Options as Stock Options to Directors, Executive Officers and Employees of the Rakuten Group Companies”, approved at the 21st Annual General Shareholders’ Meeting held on March 29th, 2018.
1. Reason for Issuing Share Options on Especially Favorable Conditions
Since the value of the Share Options is related to the Company’s stock price, delivering the Share Options as part of a performance-related compensation package to the executives and employees of the Group will allow them to share both the gains and losses of the shareholders, thus enhancing their motivation to achieve higher performance and contribute to a higher stock price.
In addition, the exercise period of a portion of the Share Options will commence on the first anniversary from the issuance of the Share Options, while the proportion of the Share Options, which may be exercised, will increase gradually in stages until the date prior to the 4th anniversary from the issuance, with the rest of the Share Options becoming exercisable thereafter. In this way, it will be possible to exercise the Share Options on the 1st anniversary of their issuance. This will offer an attractive compensation package to prospective recruits to the Group, especially in countries and regions where the competition for talent is intense. On the other hand, by making a portion of the Share Options exercisable gradually in stages until the date prior to the 4th anniversary of their 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 members.
The Company intends to implement stock option plans for the executives and employees of the Group in order to continuously enhance the Group’s corporate and shareholder values by recruiting and retaining talented members 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 determination of the total compensation amount, including granting of Share Options, several factors are taken into consideration 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 evaluation of each individual.
As a general rule, the Group has designed its compensation system so that as an individual’s rank and their role played increases, the portion of their total compensation comprised of performance-based bonuses (based on individual, Group Company, business unit or department performance) and stock options (that are linked to stock prices) also increases. 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 low ranks and small roles up to Directors. This reflects the Group’s belief that making the majority of its executives and employees potential shareholders will further raise the awareness of each executive and employee towards enhancing corporate and shareholder values. Additionally, this is expected to 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.