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Business

Corporate Japan embracing stock options for staffers

TOKYO -- Stock option plans are growing popular again with Japanese enterprises as a way to reward employees.

     A record 654 listed companies offered such plans in fiscal 2015 -- up a little over 10% on the year and topping the previous high, marked in fiscal 2005.

     With no immediate cash payouts required, stock options are a friendly choice for financially strapped businesses.

     RaQualia Pharma has been in the red because it gives "cash priority to R&D," yet still wanted to "boost employee morale," a spokesperson said. So the drugmaker has introduced a stock option plan.

     Companies new to the equities market are particularly keen on this type of perk. Fifteen of the 92 that held initial public offerings in 2015 introduced stock option plans that year.

     The corporate governance code that took effect last June is also pushing the trend. Executive compensation should reflect medium- to long-term business results, according to the code.

     "Inquiries about stock options have increased with the code's adoption," said consultant Kazuki Kobayashi of the Daiwa Institute of Research.

     Hisamitsu Pharmaceutical has introduced stock option plans, replacing retirement bonuses linked to years of service.

     Nursing care provider Tsukui is reflecting management goals in executive compensation. Top managers can buy its shares later at the current price, with one catch: They can exercise the options only if fiscal 2017 group operating profit beats the 5.7 billion yen ($52.4 million) target.

     And at Shiseido, officers' stock option perks are determined in a two-part process. They receive different amounts of options in line with the cosmetics giant's earnings at the time and individual contributions. How much they can exercise depends on such factors as the profit growth rate.

(Nikkei)

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