Megabanks Mitsubishi UFJ, Sumitomo Mitsui Introduce Employee Stock Compensation; Plans to Boost Motivation, Leadership

The Yomiuri Shimbun

11:52 JST, May 27, 2024

Major banks are increasingly compensating employees with company stock. Mitsubishi UFJ Financial Group, Inc. and Sumitomo Mitsui Banking Corp. will introduce a system this fiscal year to transfer shares to employees based on the points they are awarded. By introducing a compensation system linked to corporate value, they aim to boost employee motivation.

Mitsubishi UFJ Financial Group will award points to 5,600 managers across its three main subsidiaries: the bank, trust bank and securities firm, providing they meet certain requirements. After a set three-year period, employees can receive shares equivalent to a certain percentage of their points. The requirements are expected to include evaluations during the period. If the stock price rises, the profit from selling the shares will increase. Mitsubishi UFJ Financial Group hopes this will “provide opportunities to exercise leadership.”

Sumitomo Mitsui Banking will use shares of its listed parent company, Sumitomo Mitsui Financial Group, Inc., as compensation. Employees will receive these at the time of their retirement, based on points added according to compensation grade and the company’s performance. The system will cover about 350 senior employees, including department heads at the head office and branch managers, and the company is considering expanding it to other senior employees in the group.

The reason for receiving the shares at retirement is to motivate employees to grow the company with a long-term perspective. If the shares are treated as retirement income, there are also tax benefits.

Mitsubishi UFJ Financial Group and Sumitomo Mitsui Banking will procure the shares to be transferred through their trust banks. The moves by these two companies may influence the compensation systems of other major and regional banks.