2019.02.27 Corporate
● LINE plans to issue and grant its officers and employees stock-based compensation equivalent to approximately 3.6% (annual) of total number of shares issued
● Introduction of a bold compensation policy on par with global standards, with aim to maximize values provided to all stakeholders
● Deliver "WOW" through personnel and compensation systems to enhance talent competitiveness and drive the LINE Group to further growth
TOKYO – February 27, 2019 – LINE Corporation ("the Company") announces that it has passed a resolution at its board meeting held on February 26, 2019 on a policy to establish a compensation plan and introduce a new share-based compensation system that is based on the contribution of officers and employees for three fiscal years starting from the fiscal year ending December 2019.
In order to further enhance the LINE Group's competitiveness and grow as a global player, the Company must enhance its corporate value over the mid to long-term and maximize the value it provides to all stakeholders. Based on this understanding, the Company passed a resolution on a policy to introduce a new share-based compensation plan. For three fiscal years starting from the fiscal year ending December 2019, the Company will issue and grant officers and employees of LINE Group – based on their level of contribution – a stock option or other share-based compensation of approximately 3.6% per year (a total of approximately 10.8% over the three-year period) of the total number of shares issued.
Directors' (excluding outside directors) stock options for the current fiscal year are distinguished from that of employees by an exercise condition that is based on stock price. Directors may only exercise options if the average stock price exceeds 7,518 yen for ten consecutive business days during the three-year period from the start date of the exercise period. The new compensation plan encourages LINE senior management to further commit to the growth and development of the LINE Group, as well as demonstrates the Company's expectation of high levels of contribution.
Details on the compensation policy and the new share-based compensation plan is available in the "Notice Regarding the Issuance of Stock Options (Warrants) and the Establishment of the Compensation Policy" earlier disclosed by the Company.
https://d.line-scdn.net/stf/linecorp/en/ir/all/LINE_Compensation_20190226_EN.pdf
Background to the New Compensation Policy
The next three fiscal years have been marked as the "Second Founding Period" for the LINE Group, where it will aim to make its next great leap by leveraging the LINE app's robust growth amid new challenges such as FinTech, AI, and blockchain. Since its establishment, the Company has operated under a "service driven" mindset and the unrivaled competing power that it entails, taking on challenges to become No. 1 through various services that enrich the world and deliver amazing WOWs to its users.
As it looks to enhance its competitiveness and commit to further growth, it will be important that its world-class talent share the same ambition and are strongly motivated and determined to face challenges head on.
The LINE Group strives to grow and develop as a global entity. The new stock option plan is a bold one that goes beyond the conventional framework of Japanese companies to be on par with global standards. With this plan, the Company aims to deliver WOW not only through its services, but also through its personnel and compensation systems. In this critical period where it is aiming to grow at the global level, the new compensation plan was also developed with the goal of driving the commitment among both officers and employees toward service expansion, as well as securing first-rate talent and bolstering global competitiveness.
With this, the Company intends to propel further growth of the LINE Group as a whole, enhance corporate value, and deliver even more value to all its stakeholders.
About the Share-based Compensation Plan
LINE will issue and grant to officers and employees of the LINE Group – based on their level of contribution – a stock option or other share-based compensation of approximately 3.6% per year (a total of approximately 10.8% over the three-year period) of the total number of shares issued for the three fiscal years starting from the fiscal year ending December 2019. An exercise condition based on stock price is set for directors' stock options (excluding outside directors) for the current fiscal year. The new compensation plan encourages LINE senior management to further commit to the growth and development of the LINE Group, and demonstrates the Company's expectation of high levels of contribution.
Additionally, in introducing a bold share-based compensation plan that goes beyond the traditional standards adopted by Japanese corporations, the Company established a Compensation Committee that is ensured a level of independence equivalent to that of European and U.S. companies. The new share-based compensation plan was decided on based on the advice and recommendations of the Compensation Committee. More details can be found in the Compensation Policy under "3. Compensation Policy- (3) Compensation governance."
Overview of the New Share-based Compensation Plan
(1) Officers and employees of LINE Group (includes directors, outside directors, and employees)
Grant period: three-year period from the fiscal year ending December 2019
Issue quantity: issue and grant stock options or other share-based compensation equivalent to approximately 3.6% (each fiscal year, single-year) of total shares issued.
Exercise period: three years after allotment date
Condition to exercise option*: must be in position of officer or employee of the LINE Group
(2) Directors included in (1) (excludes outside directors)
Grant period: three-year period from the fiscal year ending December 2019
Issue quantity: Of the approximately 3.6% (each fiscal year, single-year) of the total number of shares issued described in (1), issue and grant approximately 1.26% (each fiscal year, single-year). The Company will issue and grant to Jungho Shin a stock option of approximately 0.9% (each fiscal year, single-year) of the approximately 3.6% (each fiscal year, single-year) of the total number of shares issued described in (1).**
Exercise period: three years after allotment date
Condition to exercise option*:
- Must be in position of officer or employee of LINE Group
- An exercise condition based on stock price is set for stock options for the current fiscal year. The average stock price must exceed 7,518 yen for ten consecutive business days during the three-year period from the start of exercise period.
*A resolution was passed at the 15th Ordinary General Meeting of Shareholders held on March 31, 2015 to limit the total annual compensation of the Company's directors to one billion yen. For the purpose of providing incentives to contribute to continuing enhancement of corporate value and shareholder value over the medium and long-term, the Company proposes an agenda to be discussed at the 19th Ordinary General Meeting of Shareholders scheduled for March 28, 2019 in relation to the allotment of share warrants in the form of stock options for directors (excludes outside directors and part-time directors) that is separate from the above-mentioned compensation limit, and set a maximum limit on the amount of such compensation, etc., in relation to share warrants at 80 million yen. (Applicable period: January 1, 2019 through to December 31, 2019)
(3) Outside Directors included in (1)
Grant period: three-year period from the fiscal year ending December 2019
Issue quantity: issue and grant an appropriate range of stock option or other share-based compensation equivalent to approximately 3.6% (each fiscal year, single-year) of total shares issued described in (1).
Exercise period: three years after the allotment date
Condition to exercise option*: must be in position of officer or employee of LINE Group
*A resolution was passed at the 15th Ordinary General Meeting of Shareholders held on March 31, 2015 to limit the annual total compensation of the Company's directors to one billion yen. For the purpose of providing incentives to contribute to continuing enhancement of corporate value and shareholder value over the medium and long-term, the Company proposes an agenda to be discussed at the 19th Ordinary General Meeting of Shareholders scheduled for March 29, 2019 in relation to the allotment of share warrants in the form of stock options for outside directors that is separate from the above-mentioned compensation limit, and set a maximum limit on the amount of such compensation, etc., in relation to share warrants at 63 million yen. (Applicable period: January 1, 2019 through to December 31, 2019)
The granting of share-based compensation to directors is subject to approval of the necessary matters at the ordinary general meeting of shareholders.
*Exercise conditions for issued stock options are not limited to those provided in the information above.
**Based on Jungho Shin's achievements in conceiving and growing the communication app LINE, and of the critically important role he plays as Chief WOW Officer (CWO) to provide innovative services and promote innovation within the LINE Group.