Matters related to management strategy |
Deliberations on budgets and business plans; approval of financial statements. Matters related to capital policy. Matters related to M&A, etc. |
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Matters related to governance |
Matters related to management structure, organizational changes, and human resources. Report on the Nomination and Compensation Committee activities. Matters related to the evaluation of the effectiveness of the Board of Directors. Matters related to the Corporate Governance Code. Matters related to business risks. Matters related to internal audits, etc. |
Corporate Governance
- Corporate Governance System
- Corporate Governance
- Implementation Status of the Corporate Governance Code
- Results of Evaluation of the Effectiveness of the Board of Directors
- Independent Officers Notification
Corporate Governance System
Board structure | Two-tier board with statutory auditors |
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Number of directors | 8(Outside directors : 4) |
Number of audit & supervisory board members | 4(Outside audit & supervisory board members: 2) |
Tenure (directors) | 1 year(same as Outside directors) |
Incentive to directors | Basic compensation, Bonus, Restricted Stock Compensation |
Number of subsidiaries | 37(as of March 31, 2023) |
Accounting auditor | Deloitte Touche Tohmatsu LLC |
Ⅰ. Overview of the Corporate Governance Structure
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1. Benesse's Corporate Governance Structure
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Overview of the Corporate Governance Structure and Reasons for Adoption
Guided by our corporate philosophy of “Benesse = Well-Being”, since our founding, Benesse Holdings, Inc. (the “Company”) and the Benesse Group have been tackling various social issues and providing support for customers to improve themselves and to solve problems throughout their lives, primarily in the areas of education, nursing care, lifestyle and parenting. Our corporate philosophy is precisely the same as the “well-being” which the SDGs strive for, and the Company and the Group aim to contribute to people’s well-being by supporting childbirth and parenting, developing human resources capable of contributing to all 17 SDGs through education, and also by taking initiatives in the nursing care field, which will present challenges in the future, not only in Japan but around the world.
Under this corporate philosophy, the Company believes that continuing to provide products and services based on the three values of social value, customer value, and economic value will help us contribute to a sustainable society and continue developing soundly as a company. Therefore, the Company operates under the following management structure.
The Board of Directors is comprised of 3 executive officers, 1 non-executive officer, and 4 outside directors, and is chaired by non-executive director. In principle, the board meets once a month to make important management decisions and oversee the execution of business of the Company and the Benesse Group companies. The Nomination and Compensation Committee serves as an advisory committee to the Board of Directors. The committee is chaired by an outside director, and the majority of its members are outside directors. The Nomination and Compensation Committee is currently comprised of 4 outside directors and non-excecutive director and the Representative Director and President, CEO. The committee reviews the appointment and dismissal of the Representative Director and President, CEO and of directors, and submits its opinions to the Board of Directors. The committee also makes decisions regarding individual directors’ compensation based on their responsibilities on the Board of Directors, reviews the directors’ compensation system, and submits its opinions to the Board of Directors. In order to eliminate arbitrariness, if a member of the Nomination and Compensation Committee is the subject of review, they cannot participate in the decision-making process.
The Audit & Supervisory Board is comprised of 4 members (including 2 outside members). In principle, the board convenes once a month to receive and discuss reports on important audit related matters and to decide other matters related to the execution of duties of Audit & Supervisory Board members, such as audit policies and methods for examining the status of operations and assets.
As a holding company, Benesse Holdings, Inc. has established a Board of Directors and an Audit & Supervisory Board in order to carry out appropriate governance of the Group as a whole. More than half of the Board of Directors are outside directors, and at least one-third are independent outside directors. The Company continuously appoints executive directors, multiple outside directors with a high degree of independence, and non-executive directors who convey our founding philosophy and supervise management from the perspective of shareholders. This ensures that the Board of Directors engages in active debate from a variety of perspectives unconstrained by internal circumstances and maintains and improves its supervisory functions, thereby ensuring execution of its duties. In addition, effective auditing is conducted by standing auditors familiar with the company’s affairs and independent outside Audit & Supervisory Board Members qualified as lawyers and certified public accountants.
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Activities of the Board of Directors and Nomination and Compensation Committee
(1) Board of Directors
・Members and Record of Attendance
Name Position Record of attendance in the fiscal year ended March 2023 Hideaki Fukutake Chair of the Board of Directors, Non-executive Director 13/13 Hitoshi Kobayashi Representative Director and President, CEO 13/13 Shinya Takiyama Director and Senior Managing Executive Officer 13/13 Kenji Yamakawa Director and Senior Managing Executive Officer (*1)11/11 Mutsuo Iwai Outside Director 13/13 Yumiko Noda Outside Director 13/13 Kohey Takashima Outside Director 12/13 Masaru Onishi Outside Director (*1)10/11 (*1) Director Kenji Yamakawa and Masaru Onishi only attended the Board of Directors meetings held after their appointment as directors on June 25, 2022, for a total of 11 meetings.
・Specific items for consideration (ratio of time spent deliberating at Board of Directors meetings)
(2) Nomination and Compensation Committee
・Members and Record of Attendance
Name Position Record of attendance in the fiscal year ended March 2023 Mutsuo Iwai Chair of the Nomination and Compensation Committee, Outside Director 9/9 Yumiko Noda Outside Director 9/9 Kohey Takashima Outside Director 7/9 Masaru Onishi Outside Director (*1)7/8 Hideaki Fukutake Non-executive Director 9/9 Hitoshi Kobayashi Representative Director and President, CEO 9/9 In addition, one standing auditor participated in all nine meetings as an observer.
(*1) Director Masaru Onishi only attended the Nomination and Compensation Committee meetings held after his appointment as director on June 25, 2022, for a total of eight meetings.
・Specific items for consideration
Matters related to Nomination Matters related to the appointment and dismissal of directors, etc. of the Company, matters related to succession planning, and matters related to consulting contracts with former representative directors. Matters related to Compensation Decisions on individual directors’ compensation based on the delegation by the Board of Directors, and consideration of executive compensation system. -
The Benesse Group's Oversight of business execution
Under the holding company structure, the Company collects and shares information related to the business execution of the entire Group through the following methods, based on operating company management and administration rules, with the aim of realizing the Group’s management policy and long-term vision as well as achieving all our management numerical targets. This serves as a monitoring function.
Under the Company’s executive structure, the CEO is appointed as the chief executive officer of the Benesse Group, and supervision of the Group’s strategic business domains is carried out by its major subsidiaries. The President of Benesse Corporation supervises the education and lifestyle domains, while the President of Benesse Style Care Co., Ltd. supervises the nursing care and childcare domains.
The Company also appoints people in charge of administrative divisions to assist the directors in the execution of the Group's business. They are appointed for each field, including Group growth strategies, the medium-term management plan, business planning and budgeting, human resources, Group governance, public relations, investor relations, branding, finance, accounting, DX strategy, IT, personal information protection, information security, and risk management and compliance. They help to advance the Group's management and administration as well as identify and solve management issues.
Subsidiaries must consult with the Company before making any administrative decisions on important matters that could impact the Group’s management. In the case of subsidiaries which are supervised by the Presidents of Benesse Corporation and Benesse Style Care Co., Ltd., those consultations are carried out through the presidents of the companies which oversee the relevant business domains. The presidents of the subsidiaries which supervise the relevant business domains discuss these matters with the people in charge of the administrative divisions from the perspective of ensuring the Group’s growth and legal compliance, followed by a process of approval of the CEO and a resolution by the Company’s Board of Directors.
The Company has established a Management Council for the purpose of sharing issues important to the Group and for discussing matters within each strategic business domain and laterally across domains, as well as management issues for the Group as a whole. The Council is chaired by the CEO and attended by the Presidents of Benesse Corporation and Benesse Style Care Co., Ltd., the heads of their in-house business companies, people in charge of the Company’s administrative divisions, and others designated by the CEO.
The Company has also established a Company Management Committee (CMC) where the Company and each of its strategic business domains report and discuss progress in executing business plans, KPI, and other important cross-domain issues. The Committee is chaired by the heads of the relevant in-house companies and attended by the CEO, the Presidents of the companies supervising the relevant strategic business domains and the heads of their in-house business companies, people in charge of the administrative divisions, and others designated by the CEO.
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Implementation of Internal Control System
In accordance with the basic policies of the Benesse Group’s Internal Control System and the Ordinance for Enforcement of the Companies Act, a resolution was passed at the Board of Directors meeting held in May 2006 to establish the broad outline necessary for the establishment of the system. The resolution was reviewed at the March 30, 2022 Board of Directors meeting in light of changes in the management structure effective April 1, 2022, and the revision which was passed on April 1, 2022 is the latest revision.
Also, the Company’s Internal Auditing Department promotes a Group-wide integrated approach to creating internal controls pertaining to financial reporting based on Japan’s Financial Instruments and Exchange Act and other such measures.
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Implementation of Risk Management System
In October 2010, we established the Benesse Group Principles. Rooted in the Group's corporate philosophy, the principles lay down the correct behavior for each executive officer and employee, to ensure that they perform their duties appropriately and ethically. Following the Benesse Group Principles, each operating company fully complies with societal rules, corporate ethical principles and laws and regulations. Furthermore, in April 2023 we established a Group purpose and we are building a management structure to facilitate continuous growth and development by pursuing the realization of our corporate philosophy and continuing to create value for society.
The Company has formulated Benesse Group Risk Management and Compliance Rules targeting the Group as a whole. Each subsidiary complies with the laws and regulations and has more detailed codes of conduct and rules specific to the type and characteristics of its business, scale of business, and work environment, etc. These various rules ensure that business is conducted in an appropriate manner and that compliance is carried out thoroughly.
The Company has established a Risk and Compliance Committee to promote risk management and compliance for the Benesse Group as a whole. Committee members include the CEO, people in charge of the Company’s administrative divisions, the Presidents of Benesse Corporation and Benesse Style Care Co., Ltd., and the heads of their in-house business companies. The Committee is chaired by the person in charge of the administrative division which oversees risk management and compliance. By monitoring the progress of material risk countermeasures included in the business plans of the Company and its subsidiaries, the Committee visualizes the status of the Group’s major risks, and determines the Group's major risks and risk countermeasures every fiscal year. The Committee regularly reports the results to the Company’s Board of Directors which are then disseminated within the Company and its subsidiaries, and promotes improvements (including corrective measures, implementation of preventive measures, education, and training, etc.) and other important risk countermeasures. Applying the PDCA cycle in this way, negative information is shared and normal risk management and compliance activities are promoted.
With regard to crisis measures, we establish a simple and clear system within the Benesse Group Risk Management and Compliance Rules to ensure that information is immediately reported to the Company in the event of a crisis. We believe that it is important to respond in a timely and appropriate manner in accordance with this system when a crisis occurs.
Since 1999, the Benesse Group has operated an internal whistleblower system, that was set up to give employees a means of reporting violations of standards and principles, and has made such reporting an obligation of all our employees. To avoid any potential disadvantage to whistleblowers, reports can be made anonymously and confidentially.
Since 2005, the system has been expanded to domestic Group companies and a contact point via a third party organization is in operation. The internal reporting system was expanded in 2009 to include overseas Group companies. In November 2019, the global whistleblower system was upgraded, and the company established a whistleblower contact point in the Group in response to the amendments to the Whistleblower Protection Act which took effect in June 2022.
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Outline of the Terms of Liability Limitation Agreements and Directors and Officers Liability Insurance Agreements
The Company has signed agreements with all directors (excluding executive directors, etc.) and Audit & Supervisory Board members to limit their liability for damages in accordance with Article 423, Paragraph 1 of the Companies Act. Based on these agreements, in cases where the directors (excluding executive directors, etc.) and Audit & Supervisory Board members act in good faith and there is no gross negligence of duty, liability for damages is limited to the higher of either ¥10 million or the minimum amount prescribed by Article 425, Paragraph 1 of the Companies Act.
Furthermore, the Company has signed directors and officers liability insurance agreements with an insurance company, in accordance with Article 430-3, Paragraph 1 of the Companies Act. The Company’s directors and Audit & Supervisory Board members are insured and the Company pays all premiums. The insurance agreements cover compensation for damages and legal fees in the event that the insured is held liable for damages arising from his/her execution of duties. However, the agreements do not cover damages arising from violations of laws and regulations knowingly committed by the insured. This is to ensure that the insured’s proper execution of duties is not compromised.
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Ⅱ. Management
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Number of Outside Directors and Outside Audit & Supervisory Board Members and their Relationships with the Company
As of June 26, 2023, four of the eight directors are outside directors and two of the four Audit & Supervisory Board Members are outside Audit & Supervisory Board Members.
Outside Audit & Supervisory Board Member Eiichi Izumo has in the past been a partner of Deloitte Touche Tohmatsu LLC, with which the Company has concluded an audit agreement. Outside Audit & Supervisory Board member Miyuki Ishiguro is a partner of Nagashima Ohno & Tsunematsu, with which the Company has concluded a consulting contract. The other outside officers, namely outside directors Mutsuo Iwai, Yumiko Noda, Kohey Takashima, Masaru Onishi are not currently, nor have they been in the past, executives or employees of another company or entity that has a special relationship of interest with the Company, either a personal relationship, capital relationship, trading relationship, or any other relationship of note.
The Company has determined that since all 4 outside directors meet the Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members as listed below, they have been designated as independent officers and notification has been sent to the Tokyo Stock Exchange. Outside Audit & Supervisory Board member Eiichi Izumo was a Partner at Deloitte Touche Tohmatsu LLC at the time an agreement to become an auditor at the Company was concluded. However, the aforementioned criteria were satisfied when Mr. Izumo left Deloitte Touche Tohmatsu LLC in January 2015, and notice designating him as an independent officer was also sent to Japan Exchange Group, Inc. Miyuki Ishiguro, an outside Audit & Supervisory Board member, is a Partner at Nagashima Ohno & Tsunematsu, with which the Company has concluded a consulting contract. Nagashima Ohno & Tsunematsu provides legal consultation services to the Benesse Group where necessary, but as the total value of these transactions is less than 1% of the consolidated revenue of the law firm in the preceding fiscal year.
In light of the Company's criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members including such transactions, the Company has determined that she meets the criteria and has designated her as an independent director of Tokyo Stock Exchange, Inc. and filed a notification with the Exchange. The criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members of the Company satisfy the independence requirements for outside directors and outside audit & supervisory board members stipulated by the Tokyo Stock Exchange, Inc.
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Reasons for appointing outside directors
Name Independence Reasons for selection (Supplementary explanation on suitability criteria) Mutsuo Iwai (Independence) Mutsuo Iwai has a wealth of corporate management experience in companies that carry forward B to C business globally, as well as extensive specialized knowledge.
He is using this extensive experience and specialized knowledge to contribute to supervision of management for medium- to long-term improvement of corporate value, as well as to improve the transparency of the decision-making processes regarding management of the Company as a director and the chair of the Nomination and Compensation Committee.
The Company therefore proposes him as a candidate for outside director, judging that as an outside director he can be expected to fulfill a management supervisory function from the perspective of promoting the sustainable growth of the Company and enhancing its corporate value over the medium to long term.
In addition, as he satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers, the Company determines him to possess a high degree of independence and has designated him as independent officer.
Yumiko Noda (Independence) Yumiko Noda has a wealth of corporate management experience in companies that carry forward business globally and extensive specialized knowledge of finance. In the Board of Directors and the Nomination and Compensation Committee, she is using this extensive experience and specialized knowledge to contribute to supervision of management for medium- to long-term improvement of corporate value, as well as to improve the transparency of the management decision-making processes regarding the management of the Company.
The Company therefore proposes her as a candidate for outside director, judging that as an outside director she can be expected to fulfill a management supervisory function from the perspective of promoting the sustainable growth of the Company and enhancing its corporate value over the medium to long term.
In addition, as he satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers, the Company determines him to possess a high degree of independence and has designated him as independent officer.
Kohey Takashima (Independence) Kohey Takashima has a wealth of corporate management experience in companies that are engaged in BtoC business, and specialized knowledge of e-commerce business. In the Board of Directors and the Nomination and Compensation Committee, he is using this extensive experience and specialized knowledge to contribute to supervision of management for mediumto long-term improvement of corporate value, as well as improvement of the transparency of the management decision-making processes regarding the management of the Company.
The Company therefore proposes him as a candidate for outside director, judging that as an outside director he can be expected to fulfill a management supervisory function from the perspective of promoting the sustainable growth of the Company and enhancing its corporate value over the medium to long term.
In addition, as she satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers, the Company determines her to possess a high degree of independence and has designated her as independent officer.
Masaru Onishi (Independence) Masaru Onishi has a wealth of corporate management experience in companies that are engaged in BtoC business globally, and broad experience and extensive specialized knowledge gained as outside director of other companies. In the Board of Directors and the Nomination and Compensation Committee, he is using this extensive experience and specialized knowledge to contribute to supervision of management for medium- to long-term improvement of corporate value, as well as to improve the transparency of the management decision-making processes regarding the management of the Company. The Company therefore proposes him as a candidate for outside director, judging that as an outside director he can be expected to fulfill a management supervisory function from the perspective of promoting the sustainable growth of the Company and enhancing its corporate value over the medium to long term.
In addition, as he satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers, the Company determines him to possess a high degree of independence and has designated him as independent officer.
Eiichi Izumo (Independence) Eiichi Izumo has expert knowledge as a Certified Public Accountant and experience in accounting audits and consulting services for many companies. In meetings of the Board of Directors and the Audit & Supervisory Board, the Company has determined that he will be able to draw on his experience and expertise and actively present opinions and suggestions regarding important management matters, and that he is able to perform his duties appropriately as an outside Audit & Supervisory Board Member.
In addition, he satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers. Accordingly, the Company determines him to possess a high degree of independence from the Benesse Group and has designated him as an independent officer.
(Eiichi Izumo is a former partner at Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC), the Company's accounting auditor. He resigned on January 31, 2015.
As of April 1, 2018, three fiscal years passed since his resignation from Tohmatsu & Co. and he has had no affiliation with the audit firm in any of the past three fiscal years. Accordingly, the Company has determined that Mr. Izumo qualifies as an independent officer as stipulated in its Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members.)Miyuki Ishiguro As a partner at a leading law firm, Miyuki Ishiguro has extensive experience and a high level of insight into corporate legal affairs as well as experience as an outside officer at other companies.
In meetings of the Board of Directors and the Audit & Supervisory Board, the Company has determined that she will be able to draw on her experience and expertise and actively present opinions and suggestions regarding important management matters, and that she is able to perform her duties appropriately as an outside Audit & Supervisory Board Member.
In addition, she satisfies both the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members and the Tokyo Stock Exchange requirements for judging the independence of independent officers as mentioned in the left. Accordingly, the Company determines her to possess a high degree of independence from the Benesse Group and has designated her as an independent officer.
(Miyuki Ishiguro is a partner at the law firm of Nagashima Ohno & Tsunematsu, with which the Company has concluded a consulting contract. Nagashima Ohno & Tsunematsu provides legal consultation services to the Benesse Group where necessary, but the total value of these transactions is less than 1% of the consolidated revenue of the law firm in the preceding fiscal year. Accordingly, she satisfies the Company's Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members.)
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Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members
Benesse Holdings, Inc. (the Company) shall determine that the Company's Outside Directors, Outside Audit & Supervisory Board Members and the respective candidates for those posts possess a high degree of independence when all of the following criteria are satisfied:
- The individual has not served as an executive officer*1 of the Company or its Group companies (hereinafter “the Benesse Group”) within the past 10 fiscal years.
- Individuals who have satisfied all of the following conditions (A) through (H) for the past three fiscal years:
- (A) The individual is not an entity for which the Benesse Group is a major client*2 and does not serve as business personnel thereof.
- (B) The individual is not a major client of the Benesse Group*3 and does not serve as business personnel thereof.
- (C) The individual is not a major shareholder (directly or indirectly holding a voting interest of 10% or more) of the Company and does not serve as business personnel thereof.
- (D) The individual does not serve as business personnel of an entity that is a major investee of the Benesse Group (in which the Benesse Group directly or indirectly holds a voting interest of 10% or more).
- (E) The individual is not a consultant, accounting expert or legal expert who has received compensation in the form of a large amount of money or other assets*4, other than officer's compensation from the Benesse Group (or an individual belonging to an entity such as a corporation, association, or other group that has received such assets).
- (F) The individual has not received a large donation or grant from the Benesse Group*5 and is not an executive officer of such a recipient.
- (G) The individual is not an independent auditor of the Benesse Group and does not belong to a corporation, association or other group that serves as an independent auditor of the Benesse Group.
- (H) In cases where the business personnel of the Benesse Group have been appointed as outside officers of other companies, the individual does not serve as business personnel of the other company.
- The individual is not a relative*6 of a person who meets either of the following conditions "a." or "b."
- An individual who does not satisfy any of the foregoing conditions (A) through (H) in (2) above for one of the past three fiscal years. However, the business personnel stipulated in conditions (A) through (D) and (F) and (H) shall refer only to key business personnel*7. Condition (E) shall apply only to persons with specialized qualifications, such as certified public accountants and lawyers. Condition (G) shall apply only to key business personnel and persons with specialized qualifications, such as certified public accountants and lawyers, in the individual's organization.
- Key business personnel of the Benesse Group in the current fiscal year or any of the past 3 fiscal years. (Outside auditors include non-executive directors)
Notes:- Business personnel refers to the executive directors and executive officers who execute the operations of corporations and other groups, or other officers who execute the operations of corporations, etc. Business personnel also refers to employees, directors and other equivalent posts based on the Companies Act of Japan, as well as ordinary employees and others who conduct business operations.
- An entity for whom the Benesse Group is a major client refers to an entity that satisfies any of the following conditions:
- (1) A supplier group that supplies products and services to the Benesse Group (an entity who belongs to the consolidated group of the direct supplier), where the supplier group's trading amount with the Benesse Group exceeds the higher of ¥100 million or 2% of the consolidated net sales of the supplier group, in the most recent fiscal year.
- (2) A supplier group to which the Benesse Group owes liabilities, where the Benesse Group's total amount of liabilities toward the supplier group exceeds the higher of ¥100 million or 2% of the consolidated net sales of the supplier group, in the most recent fiscal year.
- A major client of the Benesse Group refers to an entity that satisfies any of the following conditions:
- (1) A client group to whom the Benesse Group supplies products and services, where the Benesse Group's trading amount with the client group exceeds the higher of ¥100 million or 2% of the Benesse Group's consolidated net sales, in the most recent fiscal year.
- (2) A client group holding liabilities owed to the Benesse Group, where the client group's total liabilities owed to the Benesse Group exceeds the higher of ¥100 million or 2% of the client group's consolidated net sales, in the most recent fiscal year.
- (3) A financial Institutions (an entity belonging to the consolidated group to which the direct lender belongs) from which the Benesse Group has borrowed funds, where the total amount of the Benesse Group's borrowings from the financial institutions exceeds 2% of the Benesse Group's consolidated total assets in the most recent fiscal year.
- A large amount of money or other assets refers to a monetary compensation value the average of which over the past 3 fiscal years exceeds the higher of ¥10 million or 2% of the entity's net sales or gross income in the most recent fiscal year.
- An entity receiving a large charitable donation or subsidy from the Benesse Group refers to an entity receiving a charitable donation or subsidy from the Benesse Group, the average of which over the past 3 fiscal years exceeds the higher of ¥10 million or 2% of the entity's net sales or gross income in the past fiscal year.
- Relatives refer to spouses, relatives within the second degree of kinship and those with whom a livelihood is shared.
- Key business personnel refer to business personnel such as executive directors, executive officers and other officers who execute the operations of corporations, etc., as well as those who execute key operations, such as division managers.
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Appointment of Outside Officers, Functions and Roles to be Fulfilled within Benesse's Corporate Governance Structure
In order to ensure the Board of Directors’ management supervision function, more than half of the board members are outside directors, at least one-third are independent directors. Moreover, by ensuring that an outside director serves as the chair of the Nomination and Compensation Committee and that outside directors make up the majority of its members, the Company is creating a structure for enhanced supervision of management.
Going forward, Benesse will continue to make effective use of the abundant experience and insight of Outside Directors in corporate management and related areas, as well as their international experience, in the management of the Group.
Furthermore, for its outside Audit & Supervisory Board members, the Company has appointed a qualified attorney and a certified public accountant. From their independent perspective, they will apply their abundant respective experience and insight to serve as a supervision function for management, striving to enhance their function by coordinating with other Audit & Supervisory Board members, the internal audit division, and the independent auditor.
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Cooperation by Outside Directors and Outside Audit & Supervisory Board Members on Oversight and Audits, Internal Audits, Corporate Audits and Independent Audits, and Relationship with Internal Control Departments
Through attendance at Board of Directors’ meetings, the outside directors receive reports from internal auditing departments on the results of the previous fiscal year’s audit and the plans and progress on this fiscal year’s audit, as well as receiving reports on appropriate major issues and themes.
Outside Audit & Supervisory Board Members cooperate with internal auditing departments and the independent auditors to enhance management oversight by exchanging opinions as necessary in addition to regularly expressing their opinions at Audit & Supervisory Board meetings.
Ⅲ. Implementation of auditing
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1. Implementation of corporate auditing
<Corporate Audit Organization, Personnel and Procedures>
The Company has an Audit & Supervisory Board, comprised of two standing auditors and two non-standing auditors. One of the standing auditors has considerable experience in the field of finance and accounting. The Non-standing auditors are outside auditors who are either certified public accountants or lawyers.
The Audit & Supervisory Board, in accordance with the Audit & Supervisory Board Members' Auditing Standards, has adopted an auditing policy that places emphasis on preventive audits and is responsible for establishing a quality corporate governance system that lives up to the public's trust.
<Activities of the Audit & Supervisory Board and its Members (frequency of board meetings, specific items for consideration, individual auditors’ attendance and activities of standing corporate auditors, etc.)>
There is at least one meeting per month of the Audit & Supervisory board in the fiscal year. Attendance of individual members is as follows.
Name Position Record of attendance in the fiscal year ended March 31, 2023 Yoshinori Matsumoto Standing Audit & Supervisory Board Member 100%(16/16) Naoto Saito Standing Audit & Supervisory Board Member 100%(16/16) Eiichi Izumo Audit & Supervisory Board Member 100%(16/16) Miyuki Ishiguro Audit & Supervisory Board Member 100%(16/16) By attending important meetings including those of the Board of Directors, the Nomination and Compensation Committee, and the Management Council, and by regularly exchanging opinions with top management, members of the Audit & Supervisory Board share an awareness of key management issues. Also, by examining important financial reporting documents, they verify the execution of business and review the performance of duties by the directors. In addition, the two standing auditors and one of the non-standing auditors are also responsible for auditing major business subsidiaries, and hear business reports from the persons in charge of operating companies and actively investigate the status of operations.
The Audit & Supervisory Board holds regular joint conferences with internal auditing departments and the independent auditors to exchange information as necessary on topics including operational reports and other matters. Through deeper mutual understanding and the active expression of opinions, it strives to expand its supervision over management.
The Company has assigned two dedicated staffs to assist the Audit & Supervisory Board members, and the Group enhanced its audit system by establishing the Benesse Group Audit Committee with the addition of standing Audit & Supervisory Board members for subsidiaries, and strengthening cooperation.
The Audit & Supervisory Board Member Hotline was set up in May 2007, specifically as an internal channel for all executive officers and employees of the Group to provide information about issues concerning directors and other senior managers of the Company. The hotline allows this information to be reported directly and even anonymously to the Company's standing Audit & Supervisory Board members. With this system, the Group aims to ensure the efficacy of its supervision functions.
The following topics are reviewed throughout the year as the specific items for considerations of the Audit & Supervisory Board.
Matters to be resolved Audit policy, audit plan, division of duties, request for submission of proposals for appointment of auditors to the general meeting of shareholders, evaluation and reappointment or non-reappointment of the accounting auditor, draft audit report, etc. Matters to be reported Confirmation of the agenda for Board of Directors meetings, report on the status of corporate auditor activities and confirmation of the contents of internal decisions, report on the Audit & Supervisory Board Member Hotline, etc. Matters to be discussed Annual review of auditor activities, evaluation and reappointment or non-reappointment of the accounting auditor, draft audit reports, hearing of reports of the internal audit department’s annual audit plan and individual audit results, hearing of audit firm's annual audit plan, exchange of opinions with outside directors, internal directors, and executive officers. Others Audits of business establishments, including overseas offices, based on the annual audit plan. Domestic and overseas travel restrictions due to COVID-19 have made it difficult to conduct on-site audits, but the appropriate audits are being conducted using web conferencing and other digital tools.
Ⅳ. Officer Compensation
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1. Amount of Officer Compensation and Benefits (Fiscal year ended March 31, 2023)
Officer Category Amount of Compensation
(Millions of Yen)Amount of Compensation by Type
(Millions of Yen)Number of Eligible Officers Basic Compensation Performance-linked Compensation Non-monetary Compensation Directors
(excluding Outside Directors)105 63 15 26 5 Outside Directors 50 50 - - 5 Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)64 64 - - 2 Outside Audit & Supervisory Board Members 20 20 - - 2 Notes: - Maximum compensation levels for the fiscal year ended March 31, 2023 for directors and Audit & Supervisory Board members were determined by a resolution of the general shareholders' meeting, as follows:
- ・Directors:
¥500 million annually, of which ¥70 million is for outside directors (approved at the Ordinary General Shareholders' Meeting held on June 25, 2016). There were 10 directors (including 5 outside directors) at the conclusion of the Ordinary General Shareholders’ Meeting.
Within the above-mentioned maximum annual ¥500 million compensation, an annual amount of up to ¥70 million in restricted stock compensation and a maximum of 30,000 shares (approved at the Ordinary General Shareholders' Meeting held on June 24, 2017) are to be granted to directors (excluding outside directors). There were 5 eligible directors (excluding outside directors) at the conclusion of the Ordinary General Shareholders’ Meeting. - ・Audit & Supervisory Board members:
Maximum ¥100 million annually (approved at the Ordinary General Shareholders' Meeting held on June 25, 2011). There were 4 Audit & Supervisory Board members (including 2 outside Audit & Supervisory Board members) at the conclusion of the Ordinary General Shareholders' Meeting. Also, maximum stock option-based compensation in the form of restricted stock acquisition rights is ¥30 million annually with a maximum of 30,000 shares annually (approved at the Ordinary General Shareholders' Meeting held on June 24, 2007) There were 4 eligible Audit & Supervisory Board members (including 3 outside Audit & Supervisory Board members) at the conclusion of the Ordinary General Shareholders' Meeting.
- ・Directors:
- There were 8 directors and 4 auditors as of the end of the fiscal year.
- No new stock options have been granted to Audit & Supervisory Board members since fiscal 2008.
- Bonuses are paid to executive directors as performance-linked compensation. The performance indicators selected as the basis for the amount of performance-linked compensation, reasons for selecting those indicators, the method for calculating the amount of performance-linked compensation, and the results related to the performance indicators used in the calculation are as shown in “Basic Policy for Compensation 3. Details of each component (2) Bonus”. In the above table, “Performance-linked compensation” includes the amount of provision for reserve for Directors’ bonuses for the fiscal year ended March 31, 2023.
- Restricted stock acquisition rights are issued to executive directors as non-monetary compensation. Details of the relevant restricted stock acquisition rights are shown in “Basic Policy for Compensation 3. Details of each component (3) restricted stock compensation”.
The status of the granting of the relevant stock-based compensation is as follows.Number of shares Number of eligible officers Executive Directors 11,934 3
- Maximum compensation levels for the fiscal year ended March 31, 2023 for directors and Audit & Supervisory Board members were determined by a resolution of the general shareholders' meeting, as follows:
Ⅴ. Share Holdings
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1. Share definitions and holding conditions
The Company defines shares held purely for investment purposes and shares held for other purposes as follows.
Shares held purely for investment purposes are bought solely for the purpose of benefitting from movement in the share price or share-related dividends.
Shares held for other purposes are those bought for other reasons than listed above, including as policy stock or to strengthen business partnership within the Group.
Implementation Status of the Corporate Governance Code
The Company implements all principles of the Corporate Governance Code.
Results of Evaluation of the Effectiveness of the Board of Directors
Benesse conducts an evaluation of the effectiveness of our Board of Directors every year.
Please refer to the following PDF for an overview of the results.