The Rakuten Group, Inc. has announced that its Board of Directors has resolved to issue share options as stock options to executive officers and employees of the company’s subsidiaries. The reason for this issuance is to align the interests of the executives and employees with those of the company’s shareholders.
The value of the share options is linked to the company’s stock price, and by providing these options as part of a performance-linked compensation package, executives and employees will share in the gains of shareholders when the stock price rises and feel shareholders’ losses when the stock price falls. This, in turn, will enhance their motivation to achieve higher performance and higher stock prices.
In addition to aligning interests, the share options will also serve as a form of compensation for executives and employees. A portion of the share options will have an exercise period that begins one year after issuance, with the proportion of options that can be exercised increasing gradually over time until four years have passed since issuance. This will offer an attractive compensation package to prospective recruits, especially in countries and regions where competition for talent is intense.
The company intends to implement stock option plans for executives and employees in order to continuously enhance the company’s corporate and shareholder value by recruiting and retaining talented staff and by raising the motivation of executives and employees towards higher performance. In determining the total amount of compensation, the company takes into account factors such as the degree to which operating profit targets were achieved, the business performance of each subsidiary, and the personnel evaluation of each individual.
As a general rule, the company 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 and share options also increases.
A major feature of the company’s compensation system is that it delivers share options to a wide range of personnel, starting with first-year employees with relatively low ranks and small roles up to Directors. This reflects the company’s belief that making the majority of executives and employees potential shareholders will further raise their awareness towards enhancing corporate and shareholder values. Additionally, this is expected to reinforce the sense of unity among all executives and employees, which is thought to be an indispensable element in expanding and fostering the Rakuten ecosystem both in Japan and abroad.