Monday, 2 October 2023


Japanese companies warm up to employee stock incentives By Reuters

Japanese companies warm up to employee stock incentives

© Reuters. FILE PHOTO: A man stands in front of an electric board displaying the Nikkei stock average outside a brokerage in Tokyo, Japan, July 28, 2023. REUTERS/Kim Kyung-Hoon/File Photo/File Photo

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) – Airline operator ANA Holdings plans to offer around $60 million worth of shares to thousands of employees, the latest Japanese company to use employee share incentives as a tool to retain talent and comply with a request by the regulator to pay more attention to share price performance.

ANA will offer 100 shares worth about $20 each to about 70% of nearly 45,000 employees in November, following in the footsteps of other major Japanese firms such as Omron and Sony (NYSE:) Group.

The employee share incentive plans coincide with one of the most severe labour shortages Japan has seen in years, and as the Tokyo Stock Exchange urges listed firms to become “more conscious” of their share prices due to concerns that far too many companies are trading below their book value.

In the last five years, the number of Japanese companies offering equity-based compensation to employees doubled to 966, data from Nomura Securities shows, representing a quarter of the some 3,900 listed firms.

“We are seeing a surge in inquires now,” Motomi Hashimoto, principal researcher at Nomura’s stock incentive solution department, told Reuters. Stock incentives are seen positively by the market “as higher stock prices directly boost such incentives,” she said.

By having more employees as shareholders, executives hope staff will be more committed to their company’s effectiveness and earnings, and therefore its stock performance.

Raising corporate value is key for investors in Japan, where so many stocks are chronically undervalued that the Tokyo Stock Exchange made a rare call in March for firms to disclose long-term plans to improve capital efficiency.

At Omron, stock incentives are meant to “align management, employees and shareholders”, said Hitoshi Tanimura, senior general manager at the human resources department.

Sony, which introduced stock incentives years ago for some management levels, recently changed its framework to make the incentives more attractive, a spokesperson said.

At ANA, employees must hold on to their shares for three years before they can sell or transfer them, said Shintaro Takano, a general administration executive.

“When the pandemic hit our earnings, many employees in their thirties and forties…

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