Recruit Holdings Announces the Disposal of Treasury Shares through Third-party Allotment to Implement an Equity Incentive Plan primarily for HR Technology SBU Employees

Recruit Holdings Co., Ltd. (TSE 6098) (the “Company”) resolved to dispose of its treasury shares through a third-party allotment (the “Treasury Share Disposal”) to implement the Equity Incentive Plan primarily for HR Technology SBU employees at its Board of Directors meeting held today as follows.

Overview of Treasury Share Disposal

Purpose for Disposal

The Company, at its Board meeting held on November 16, 2020, resolved to introduce an Equity Incentive Plan ("Plan") primarily for HR Technology SBU employees in order to emphasize the significance of their contributions toward enhancing the Company’s corporate value. The Plan will use a scheme called the Employee Stock Ownership Plan Trust (“Trust”).

The Treasury Share Disposal shall be conducted through third-party allotment to The Master Trust Bank of Japan, Ltd., which is the joint trustee under the ESOP trust agreement (“Trust Agreement”) for the Plan concluded between the Company and Mitsubishi UFJ Trust and Banking Corporation.

The number of shares to be disposed of shall equal the number of shares reasonably expected to be required during the trust period, which is tentatively scheduled to expire on May 31, 2027, and corresponds to 1.21% (rounded off to two decimal places) of the total number of issued shares at 1,649,841,949.

The total number of voting rights will increase when the Trust acquires the Company's shares, resulting in a dilution of voting rights of existing shareholders. However, the number of shares to be disposed of is 20,000,000 and its dilution shall be limited in scale to 1.25% (rounded off to two decimal places) of the total voting rights at 15,992,625, as of March 31, 2024. We believe the number of shares to be disposed of relative to the number of shares issued is minimal and therefore we believe the resulting dilution will have a minimal impact on existing shareholders. In addition, the Trust will not exercise the voting rights on the Company shares.

The amount of treasury stock in EPS calculation will not change at the time it is acquired through the Trust. When the shares are delivered to employees, treasury stock will decrease and the total number of shares used in EPS calculation will increase, diluting EPS. However, the number of shares to be disposed of corresponds to 1.29% (rounded off to the nearest two decimal places) of the total number of shares used to calculate EPS at 1,544,640,828, as of March 31, 2024, so we expect that the impact on EPS shall be minimal.

For the purpose, details and the impact of the Plan, please refer to the “Recruit Holdings Announces Equity Incentive Plan primarily for HR Technology SBU employees” announced on November 16, 2020. The Company currently anticipates that this plan will be implemented on an ongoing basis and will continue to consider the acquisition of the Company's shares by the ESOP Trust in the future. The number of shares to be acquired each year will vary depending on multiple factors such as the Company's stock price and the number of eligible employees, and the timing of the acquisition will be determined on a case-by-case basis based on the business environment surrounding the Company and market trends. The Trust may acquire the Company's shares through open market transactions, through the disposal of treasury stock, or through the issuance of new shares, but in principle, the Trust plans to acquire the Company's shares through the disposal of treasury stock.

Overview of the Trust Agreement

Basis for Calculating the Disposal Value, and Specific Relevant Details

The disposal value was determined at the closing price of the Company’s shares on the Tokyo Stock Exchange, Inc. (the “TSE”) on the business day immediately preceding the date of resolution at the Board of Directors meeting regarding the Treasury Share Disposal (May 14, 2024), at the amount of 7,000 yen (rounded down to the nearest whole yen). The decision to adopt the closing price of the Company’s shares on the business day immediately preceding the date of resolution at the Board of Directors meeting was reached based on its high objectivity and rationality as the closest market price to the resolution at the Board of Directors meeting, serving as the basis for calculation.

All members of the Company's Audit & Supervisory Board (a total of 4 members, two of which are outside members) have expressed their opinion that the said disposal value is not especially favorable.

Procedures in the Code of Corporate Conduct

For this Treasury Share Disposal, the dilution rate will be less than 25% and there is no change in controlling shareholders. Accordingly, it is not subject to requirements to obtain an opinion from an independent third party and confirm the intent with shareholders specified by Article 432 of the Securities Listing Regulations established by the TSE.

Recruit Holdings Announces the Disposal of Treasury Shares through Third-party Allotment to Implement an Equity Incentive Plan primarily for HR Technology SBU Employees (197KB)