Announcement of Additional Monetary Contribution to the “Stock Grant ESOP Trust”

SHIFT Inc. (“SHIFT,” headquartered in Minato-ku, Tokyo, Japan; Masaru Tange, CEO and Representative Director) announced today that it has resolved to make additional monetary contributions and add employees of its subsidiaries who have been conventionally out of the scope of the “Stock Grant ESOP Trust” (hereinafter referred to as the “Plan”), an incentive plan introduced in 2016 for employees of SHIFT and its subsidiaries (hereinafter referred to as “Employees”).

1. Reasons for Additional Monetary Contribution
Ever since introducing this plan in January of 2016, SHIFT has been granting shares mainly to employees who have demonstrated particularly high performances (employees with over 25% increase of their annual salary). The effects of this incentive plan have shown to boost commitment to work as well as reducing retirement rates and increasing motivation among both the beneficiaries and other employees in general. Additionally, by acquiring large amounts of shares as a bulk at an early stage, compared to other incentive plans such as providing cash bonus, SHIFT have enjoyed many benefits in terms of both profit and loss statement, as well as cash outflow, especially because we have experienced a phase of rising stock prices since 2016.

The actual results of ESOP introduced in January of 2016 was as followings; While the expense recorded was 60 million JPY for the total shares acquired, the “total value (share price at the time multiplied by the number of shares)” granted to employees over 6 years as rewards totaled approximately 600 million JPY. As we were able to realize benefits that far exceeded the expenses, we believe that this is a highly effective reward system from financial perspective.

Based on these results, in January of 2021, we have decided to include executives as candidates for this plan and make additional monetary commitment in order to continue to provide this incentive plan for employees who perform particularly well, and to make a greater commitment to improving corporate value in a medium to long term run. Moreover, in October 2021 as well, we have decided to make additional monetary contribution by expanding the target to include employees of group companies that have conventionally been out of scope of this system.

Additionally, as a result of our strategic M&A activities, we have now over 30 group companies. Therefore, we have examined wide range of measures to optimize group management system and to increase the corporate value of SHIFT group.

The background of the additionally monetary commitment that we will make this time is 1. that we will add employees of wider group companies and 2.that the progress rate of target (such as net sales) is exceeded to enhance the incentive system such as boosting commitment to work as well as reducing retirement rates and increasing motivation. As we added employees of group companies that have conventionally been out of scope of this system, this additional monetary commitment will bring effects to the overall group.

Please refer to the link below for further information.
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