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.

Group Sustainability Commitee
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.

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Directors

Rakuten’s Board of Directors at a Glance

Details of the Directors

Director Type Name and Reason
for Appointment		 Term of Office
(years)		 Board / Audit Board
Meeting Attendance		 Skills

IT

Finance

Corp. Mgmt

Legal & Risk Management

Accounting

Global Experience
Board of
Directors		 Chair Hiroshi Mikitani 26 100%
(13/13 meetings)		 ● ● ●     ●
  Masayuki Hosaka 9 100%
(13/13 meetings)		 ● ● ●     ●
Kentaro Hyakuno 2 100%
(13/13 meetings)		 ●   ● ●   ●
Kazunori Takeda - - ●   ●     ●
Kenji Hirose - - ● ● ●   ● ●
Independent
outside
directors		 Sarah J.M. Whitley 4 92%
(12/13 meetings)		   ●       ●
Charles B. Baxter 12 92%
(12/13 meetings)		 ●   ●     ●
Takashi Mitachi 7 100%
(13/13 meetings)		     ●     ●
Jun Murai 11 100%
(13/13 meetings)		 ●         ●
Takaharu Ando - -     ● ●   ●
Tsedal Neeley - - ●         ●
Shigeki Habuka - -   ●     ●  
Audit Board
Members		   Yoshito Naganuma - -   ●     ●  
Independent
outside
directors		 Satoshi Fujita 1 100%
(5/5 meetings)		   ● ●   ●  
Katsuyuki Yamaguchi 22 100%
(5/5 meetings)		       ●   ●
Maki Kataoka - -       ● ● ●

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:

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:

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.