Rakuten Group, Inc. (the “Company”) announces that the Board of Directors resolved today to issue the following Share Options as stock options to Directors of the Company who serve concurrently as Executive Officers of the Company and Executive Officers of the Company.
- Reason for Issuing Share Options
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 Officers of the Company will allow the Officers of the Company to share the gains of shareholders when stock prices rise and feel shareholders’ losses when stock prices fall, thus enhancing their motivation to achieve higher performance and higher stock prices.
The Share Options may only be exercised by the Officers of the Company within ten days from the date following the date on which they retire from the Company, and its subsidiaries and affiliates. As a result of these Share Options, 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 retirement compensation stock option plans for the Officers of the Company in order to continuously enhance the Group’s corporate and shareholder value, by recruiting and retaining talented staff and by raising the motivation of the Officers of the Company towards higher performance.
[Determination Methods and Main Features of the Group’s Compensation System]
In determination of the total amount of compensation, including the granting of Share Options, several factors are taken into account, 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.
As a general rule, the Group has designed its compensation system so that as an individual’s rank and responsibility 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, it is the Group’s belief that the Officers of the Company, in particular, compared to the other executives and employees of the Company, its subsidiaries or affiliates, are responsible for and should contribute to the further enhancement of performance and shareholder value of the entire Group in the long-term. Accordingly, in order to raise the motivation of the Officers of Company to contribute to the enhancement of performance and stock prices in the long-term, the Company shall issue Share Options that may be exercised within ten days from the date following the date on which they retire from the Company, and its subsidiaries and affiliates.
- Outline of the Issuance of the Share Options
(1) Total number of units and persons to whom Share Options will be allotted
Directors of the Company who serve concurrently as Executive Officers of the Company:
3 in total 1,332 units in total
Executive Officers of the Company:
46 in total 1,031 units in total
(2) Class and number of shares to be issued upon exercise of Share Options
Common stock of the Company: 236,300 shares
However, if the Company splits its common stock (including allotment of its common stock without compensation; hereinafter the same will apply) or consolidates its common stock, the number of shares to be issued upon exercise of each unit of such Share Options will be adjusted according to the following formula; provided that such adjustment will be made only to those that remain unexercised or uncanceled at the time of such adjustment and; provided, further, that if any fraction less than one share arises as a result of such adjustment, such fraction shall be discarded.
Number of shares after adjustment = Number of shares before adjustment × Ratio of split or consolidation
In addition, if the Company carries out a merger, a company split, share exchange, share transfer, or other action that makes it necessary to adjust the number of shares, the number of shares will be adjusted within a reasonable range, taking into account the conditions of the merger, company split, share exchange, share transfer, or other similar action.
(3) Total number of Share Options: 2,363 units
One hundred shares will be issued for each Share Options; provided, however, that in the event of any adjustment in the number of shares stipulated in (2) above, the number of shares to be issued for the Share Options will be adjusted accordingly.
(4) Cash payment for Share Options
No cash payment is required for Share Options. Stock acquisition rights are fairly issued and granted as the consideration for execution of duties and do not fall under issuance with favorable terms and conditions.
(5) Value of the assets to be contributed upon exercise of Share Options
The Price for one Share Option will be one yen.
(6) Exercise period of Share Options
The exercise period will be from the date on which Share Options are issued (hereinafter “date of issuance”) until the date on which 40 years have passed from the date of issuance. If the final day of the exercise period falls on a holiday of the Company, the final day will be the working day immediately preceding the final day.
(7) Conditions etc. for exercise of Share Options
(i) Those who received an allotment of the issue of Share Options (hereinafter “Holders of Share Options”), shall exercise such rights within ten days from the date following the date on which they retire as Directors, Executive Officers, Company Auditors and employees of the Company and its subsidiaries and affiliates.
(ii) Share Options may not be inherited; provided, however, that exceptional treatment may be allowed in this regard by the Board of Directors in consideration of circumstances.
(iii) Share Options may not be offered for pledge or disposed of in any other way.
(iv) The Holders of Share Options have duties to pay all taxes (including but not limited to income tax, social security contributions, pensions, and employment insurance premium) specified by laws and regulations in relation to stock options and shares. In cases where the Company and its subsidiaries and affiliates is obliged to levy income tax, etc., the relevant company obliged to levy income tax, etc. will be able to levy tax from Holders of Share Options by the methods listed below.
i) Receipt by cash
ii) Appropriation of shares owned by the Holders of Share Options
iii) Deduction from salaries, bonuses, etc. of the Holders of Share Options
iv) Other methods specified by the Company