Shonan@Tax Office No. 174
March 2004

Stock Option

        Owners and executive officers of medium and small companies run the company in a different way.

    Some may manage all by themselves, or some may be eager to expand the company. @The latter of owners and executive officers tend to have greater responsibilities in order to expand the company and desire to list their stock.

    However, they think that they want their employees to have their stock at first. Owners transfer their stock to their employees. Consequently, owners are more responsible for the company; in addition, the employees are also more responsible.

    On the other hand, in a big company and venture company, the employees own the stock of their company differently. That is called Stock Option.

    Stock Option is that employees can buy stock from their company at fixed amount. If stock prices go up, profit is bigger. Stock Option of reward type is that the company uses this profit to pay bonus.

    Japanese company started using Stock Option from 1997 because of the revision of the commercial law. More than 1,200 companies used Stock Option last year.

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