その常識、変えてみせる。 SHIFT

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Announcement of the Introduction of the Restricted Stock Unit (RSU) Plan

Announcement of the Introduction of the Restricted Stock Unit (RSU) Plan

SHIFT Inc. (“SHIFT,” headquartered in Minato-ku, Tokyo, Japan; Masaru Tange, CEO and Representative Director) announced today that at the meeting of the Board of Directors held today, it has reviewed the compensation system for executives and resolved to submit a proposal to the 16th Ordinary General Meeting of Shareholders to be held on November 26th, 2021, to introduce a Restricted Stock Unit Plan (hereinafter referred to as “Plan”).

1. Purpose and Conditions of the Introduction of the Plan
(1) Purpose of Introduction
SHIFT will introduce the Plan with the intention to provide incentive to Directors (excluding Directors on Audit & Supervisory Committee) and to Directors on Audit & Supervisory Committee. This system to Directors is to provide incentive to sustainably improve SHIFT’s corporate value and to share value with our shareholders. The one to Directors on Audit & Supervisory Committee is to provide incentive to prevent SHIFT corporate value from deteriorating and to sustain its trust.
(2) Conditions for Implementation of the Plan
At the 14th Ordinary General Meeting of Shareholders on November 27, 2019, resolution was granted for the amount of compensation given to Directors (excluding Directors on Audit & Supervisory Committee) to not exceed 100 million JPY annually (including not exceeding 1 million JPY for Independent Outside Directors). On the coming Ordinary General Meeting of Shareholders, SHIFT will ask for resolution from its Shareholders in regards to introducing the Plan within the above-mentioned compensation system for eligible Recipients, and the relevant/appropriate compensation limit.
Further, the specific timeline and details of issuance for each eligible Directors (hereinafter referred to as “Recipients”,) will be determined at a Board of Director’s meeting (or for Directors on Audit & Supervisory Committee, at Audit & Supervisory Committee), in accordance with the contents stipulated as below.

2. Outline of the Plan
Upon expiration of the calculation period, which is determined to be within 3-5 years by the resolution of the Board of Directors, the number of shares of common stock and monetary compensation etc. will be delivered to each eligible Recipient, in accordance with pre-determined conditions, as Recipient’s compensation.
Therefore, on expiration of the calculation period, common stock shares will be provided to each eligible Recipient in accordance with and depending on the achievement of several criteria. It has not been determined whether or not to deliver common stock etc. to each eligible Recipient at the time of implementing the Plan.
With the implementation of the Plan, Stock Option Plan for Directors that SHIFT has already introduced will be discontinued, excluding those options already allocated and new share options for Directors will no longer be issued.

3. Outline of Compensation
(1) Calculation Method for Compensation
Regarding the Plan, the total amount of common stock shares provided to eligible Recipients will be decided on the basis of amount of shares set to each eligible Recipient.

Total amount of common stock shares to be finally delivered*1 *2 = Amount of shares set to each eligible Recipient*3 multiplied by Ratio of service period*4

*1 From the viewpoint of securing funds for tax payment, Directors can be paid for an amount which will be calculated by multiplying a portion of the total amount of common stock shares (up to 50%) by the closing price of our common stock on the Tokyo Stock Exchange on the prior business day to each meeting of Board of Directors that has made resolutions on the issuance of common stock or disposal of treasury stock under the Plan (if a transaction is not completed on the same day, the closing price on the most recent trading day prior to that; hereinafter referred to as the “Closing Price”). In addition, in the event the total amount of common stock shared to be finally delivered is likely to exceed the upper limit of the Remuneration, etc. under the Plan as set forth in (2) below, the number of shares to be finally delivered and the amount to be paid shall be reasonably adjusted to the extent not to exceed such upper limit.
*2 In the event the number of shares to be delivered can be reasonably adjusted in accordance with the change of positions during the calculation period.
*3 The standard number of shares for each eligible Director is determined by the Board of Directors (for Directors on Audit & Supervisory Committee, by consultation with Directors on Audit and Supervisory Committee).
*4 Ratio of service period is determined at the meeting of Board of Directors (for Directors on Audit & Supervisory Committee, by consultation with Directors on Audit and Supervisory Committee). (Note that the ratio shall not exceed 1).

(2) Maximum Number of Shares to be Granted
The total amount of shares issued to eligible Directors (excluding Directors on Audit & Supervisory Committee) is up to 60,000 per year (among that, up to 15,000 per year to Independent Outside Director) and that to eligible Directors on Audit & Supervisory Committee is up to 6,000 per year. (Note that after the date in which this resolution is passed, in the event a split or consolidation of shares has been carried out (including the allotment of shares without contribution) or otherwise requires adjustment, the total number of shares to be delivered is adjusted within a reasonable range.)
Moreover, the total amount of shares to be issued or disposed for eligible Directors is up to 200 million JPY per year (among that, up to 50 million JPY per year for Independent Outside Directors), and that for eligible Directors on Audit & Supervisory Committee is up to 20 million JPY per year. (Note that the Plan expects to issue or dispose common shares as compensation etc. to Directors. Therefore, the Plan does not require contribution, and the total amount of compensation will be calculated based on the closing price per share.

(3) Conditions to Receive Compensation
Eligible Recipients will receive compensation in accordance with the Plan under the condition that they continued to be in the position set in the meeting of Board of Directors or other Director meetings. In the event of eligible Recipients lose any of the positions for the reasons that is as determined to be reasonable by the Board of Directors, the eligible Recipient shall forfeit the right to receive common shares of which amount is determined to be reasonable in accordance with the Plan up to the limit mentioned above.
In the event of certain misconduct of eligible Recipients that is determined by the meeting of Board of Directors, the Recipient will lose the right.

(4) Treatment of Organizational Restructuring, etc.
Notwithstanding the provisions of (3) above, if, after the commencement of the Calculation Period, the merger agreement in which SHIFT becomes an extinct company, the share exchange agreement or the share transfer plan in which SHIFT becomes a wholly-owned subsidiary, and other matters related to the organizational restructuring have been approved at SHIFT’s general meeting of shareholders (or if the approval of the general meeting of shareholders is not required for such organizational restructuring, by the meeting of Board of Directors), SHIFT provide the reasonable number of our common shares (or, in lieu of such shares) within the above limit that is reasonably determined in accordance with a resolution of the Board of Directors.

(5) Adjustment for Consolidation / Splitting of Shares
In the event of increase or decrease of shares due to a consolidation or split of common stock shares (including shares without contribution) before the allocation of shares or monetary compensation, the number of shares shall be multiplied with the ratio of the consolidation / split and adjusted according to the Plan.

20211026_RSU_EN

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