Corporate Governance

Corporate Governance System

Board structure Two-tier board with statutory auditors
Number of directors 8(Outside directors : 4)
Number of audit & supervisory board members4(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

  • 1. Benesse's Corporate Governance Structure

    • 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.

    • 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)
      ratio of time spent deliberating at Board of Directors meetings
      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.
      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.
      (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 KobayashiRepresentative 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 CompensationDecisions 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.

    • 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.

    • 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.

    • 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.

  • 2. Matters related to the number of directors and restrictions on qualifications, etc.

    The number of directors stipulated by the articles of incorporation is no more than 10 directors. The Articles of Incorporation stipulate that a resolution for the election of directors shall be decided by a quorum which is defined as shareholders in attendance who hold one-third or more of the total number of voting rights of shareholders who are entitled to exercise their voting rights, and not by the cumulative number of votes.

  • 3. Other stipulations in the Articles of Incorporation

    As resolution on the use of capital surplus is a sophisticated business decision, the Articles of Incorporation state that the Company may determine the matters listed in each item of Article 459, Paragraph 1, of the Companies Act, including distribution of capital surplus, by the Board of Directors without a resolution by a General Meeting of Shareholders, unless otherwise stipulated by law. This makes it possible to deliver flexible returns to shareholders.

    In accordance with the permissible relaxation on quorum requirements as stipulated by the Articles of Incorporation and to ensure smooth operations of the General Meeting of Shareholders, resolutions stipulated in Article 309, Paragraph 2, of the Companies Act shall be adopted by an affirmative vote of two-thirds or more of the voting rights held by shareholders present, where a quorum of shareholders present hold shares representing one-third or more of the exercisable voting rights of the shareholders.

    Furthermore, the liability for damages of Directors and Audit & Supervisory Board Members (including former Directors and Audit & Supervisory Board Members) resulting from negligence of duty may be exempted up to the statutory limit by a resolution of the Board of Directors in accordance with Article 426 Paragraph 1 of the Companies Act of Japan. This is to ensure that Directors and Audit & Supervisory Board Members can perform their expected roles to the fullest.

Ⅱ. Management

  • 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.

  • 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.)

  • 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:

    1. 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.
    2. 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.
    3. 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:
    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Relatives refer to spouses, relatives within the second degree of kinship and those with whom a livelihood is shared.
    7. 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.
  • 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.

  • 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

  • 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 Member100%(16/16)
    Naoto Saito Standing Audit & Supervisory Board Member100%(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 discussedAnnual 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.

  • 2. Implementation of internal audit

    With regard to internal audits, the dedicated internal auditing department under the direct control of the President consisting of 21 members monitors the Company and each operating company with respect to the status and operation of their internal controls and the status of their risk preparation. In addition, it also utilizes a Control Self-Assessment (CSA) system to enhance cooperation and verification functions with business division managers. The results of the audits are reported to the President and Standing Audit & Supervisory Board Members as necessary, as well as to the Board of Directors and the Board of Audit & Supervisory Board on a regular basis. The departments respond to the "internal control and reporting systems," assessing the Company and its operating companies on their internal controls and creating assessment reports to present to the Board of Directors and Audit & Supervisory Board.

Ⅳ. Officer Compensation

  • 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:
    1. 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.
    2. There were 8 directors and 4 auditors as of the end of the fiscal year.
    3. No new stock options have been granted to Audit & Supervisory Board members since fiscal 2008.
    4. 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.
    5. 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
  • 2. Total Amount of Officer Compensation

    Name
    (Officer Category)
    Total Compensation
    (Millions of Yen)
    Company name Compensation by Category (Millions of Yen)
    Basic Compensation Performance-linked Compensation Non-monetary Compensation
    Hitoshi Kobayashi
    (Director)
    102 Benesse Holdings, Inc. 23 11 17
    Benesse Corporation 33 16 -
    Notes:  Only directors whose total amount of officer compensation is 100 million yen or more are listed.
  • 3. Basic Policy on Determining Officer Compensation

    <Directors>

    (1) Method of Determining Policy

    The Company has established a Nomination and Compensation Committee, which is chaired by an outside director, to ensure transparency, fairness, and objectivity in determining officers’ compensation. The Board of Directors advised the Committee of its policy regarding determination of compensation for each officer, and after considering the Committee’s report, the policy was approved at Board of Directors meetings held on February 5, 2021, May 11, 2021 and June 11, 2021.

    (2) Basic Policy

    The Benesse Group operates under the corporate philosophy Benesse = "Well-Being," and aims to continually raise corporate value over the medium and long term as a business group that provides constant life-long support for customers’ efforts to increase their motivation and solve issues.

    To that end, the basic policy is for compensation for executive directors to function as an incentive to continually raise corporate value (as detailed below).

    (3) Compensation levels

    The Group has adopted competitive compensation levels commensurate with the roles, abilities, and responsibilities required of its directors in the course of promoting Group management. Specifically, it establishes these levels with reference to external compensation surveys and based on the median figure at domestic companies of a similar scale.

    (4) Determination of compensation for each officer

    The Nomination and Compensation Committee determines the amount of compensation for each officer based on the resolution delegated by the Board of Directors. When the compensation levels were decided, the Nomination and Compensation Committee was comprised of Mutsuo Iwai, Yumiko Noda, Kohey Takashima, Masaru Onishi, Hideaki Fukutake, and Hitoshi Kobayashi. Mutsuo Iwai, Yumiko Noda, Kohey Takashima, and Masaru Onishi are outside directors. The authority delegated is the approval of the amount of compensation for each director, and the reason for delegating this authority is to ensure transparency, fairness, and objectivity.

    Since each director’s compensation is decided through these procedures, the Board of Directors deems the compensation to be appropriate and in keeping with the above-mentioned determination policies.

    (5) Activities of the Nomination and Compensation Committee

    The Nomination and Compensation Committee discuss the compensation for each director delegated by the Board of Directors and the policy for the officer compensation. In addition, the Board of Directors also discusses the policy for deciding the details of compensation for each officer and the granting of restricted stock compensation.

    ◆ Basic policy for executive directors’ compensation
    • 1. Compensation structure
      In order to incentivize the medium- and long-term rise in corporate value the Company targets, the compensation structure emphasizes not only short-term performance, but also medium- and long-term achievements. In real terms, compensation is comprised of: (1) basic compensation, (2) bonuses, and (3) restricted stock compensation. There are no director retirement benefits. The details of each of these components are detailed below.
    • 2. Proportion of each component
      Representative
      Directors
      Basic compensation
      (50%)
      Bonuses
      (35%)
      Restricted stockcompensation
      (15%)
      Set based on expectations for the role Performance-linked payments Compensation linked to stock price
      Other Directors
      Basic compensation
      (55%)
      Bonuses
      (35%)
      Restricted stockcompensation
      (10%)
      Set based on expectations for the role Performance-linked payments Compensation linked to stock price
    • 3. Details of each component
      • (1) Basic compensation

        Basic compensation is established based on expectations for the director's assigned role in each fiscal year. Basic compensation is paid monthly in 12 equal payments.

      • (2) Bonuses

        Bonuses comprise performance-linked bonuses that are awarded by taking into account the Company's business results for each fiscal year, and can fluctuate between 0%-200%. In addition, bonuses are comprised of three components: ① a portion linked to overall company performance, ② a portion linked to performance in the segment to which the director is assigned, and ③ a portion based on qualitative evaluation. The actual bonus is determined proportionally to each part based on whether the director is assigned to a segment or not, it’s operations, and other information, and on evaluation from a variety of aspects of each director’s contribution. The evaluation period for bonuses is the fiscal year, and they are paid in June of the following year.

        • ① Overall company performance-linked portion

          This part links to the degree of achievement of consolidated earnings targets (consolidated net sales, consolidated operating income). Evaluation is based on a table stipulated by the Nomination and Compensation Committee at the beginning of the fiscal year. This indicator was selected because it is an important performance indicator for incentivizing increase in overall Group corporate value.

        • ② Segment performance-linked portion

          This part links to the degree of achievement of performance targets (including net sales and operating income) in the segment to which the director is assigned responsibility. Evaluation is based on a table stipulated by the Nomination and Compensation Committee at the beginning of the fiscal year. This indicator was selected because it is an important performance indicator for incentivizing increase in corporate value, particularly in the segment the director to which the director is assigned responsibility.

        • ③ Qualitative evaluation portion

          This part evaluates the degree of achievement at the end of the fiscal year relative to qualitative targets set at the beginning of the year for each director for their contribution to improving the organization and brand, such as by developing successors and reforming the organizational culture. The degree of achievement (= performance) is decided through discussions on the Nomination and Compensation Committee that take account of self–appraisals by each director.

        However, in situations where it is difficult to reasonably calculate performance-linked bonuses due to considerable uncertainty as a result of the pandemic and other special factors, other indicators deemed appropriate can be used on an exceptional basis, taking the circumstances into account. For example, in addition to the performance indicators mentioned above in ① and ②, indicators of achievement of performance targets for the previous year’s consolidated results can be used.

        The results related to the performance indicators used in calculating the current fiscal year’s (FY2022) bonus payments are as follows.

        Standard value Current fiscal year (FY2022) results
        (Millions yen)
        Current fiscal year (FY2022) consolidated initial forecast
        (Millions yen)
        Consolidated net sales 426,000 411,876
        Consolidated operating income 25,000 20,620
      • (3) Restricted stock compensation

        Restricted stock compensation was introduced in FY2017 to further incentivize directors to continually improve corporate value by increasing the linkage between directors’ compensation and medium- and long-term performance, while at the same time promoting the increased sharing of corporate value with shareholders.

        Restricted stock compensation is capped at 15% of the Representative Director’s annual salary and 10% of other directors’ annual salary.

        The restricted period is set at three years, and directors are not permitted to sell or otherwise dispose of the stock during this period.

        If the Board of Directors deems that a director has committed a significant breach of the Company’s internal rules during their period of office, it can demand the repayment of share-based payments if the offence occurred during the restricted period even if the director has already left the position.

        Restricted stock compensation is granted during July and August.

    ◆ Basic policy for compensation for non-executive directors including outside directors

    Compensation for non-executive directors including outside directors is comprised of basic compensation only in order to avoid obstruction of their role in supervision of management. Basic compensation is paid monthly in 12 equal payments.

    <Audit & Supervisory Board Members>

    Compensation for Audit & Supervisory Board members is decided by discussion among the Audit & Supervisory Board members, and comprises basic compensation only.
    There are no plans for new allocation of stock options. Basic compensation is paid monthly in 12 equal payments.

Ⅴ. Share Holdings

  • 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.

  • 2. Shares held for purposes other than investment

    (1) The verification methods used by the Board of Directors and other committees for shareholding policies and the rationality of holdings, as well as for assessing the suitability of holding each stock.

    Benesse holds shares of companies deemed necessary in order to achieve sustainable growth and raise our social and economic value, as part of our management strategies including financing and business alliances, and in order to build good relationships with business partners and local communities and ensure smooth business operations.

    The Board of Directors or a committee with corresponding functions decides whether to continue holding or sell policy stocks after a verification of the suitability of the holding, which is based on an investigation of whether each individual stock is suitable for the holding purpose and whether the benefits of holding balance out the risks and capital cost.

    The appropriateness of holding individual securities is determined on a comprehensive basis, looking at such factors as annual dividends received, valuation gain or loss on shares, net assets per share, business results, trading activity, and other economic rationality. If the holdings are not considered reasonable, the company will consider selling the securities with the understanding of the issuer.

    Also, the voting rights of strategic shareholdings are exercised taking into account on a comprehensive basis whether doing so contributes to establishing an appropriate corporate governance system and enhancing the issuer’s corporate value over the medium to long term.

    At the May 2022 Board of Directors Meeting, the suitability of each individual security holding was verified. With regard to shares in unlisted companies, shares in one position were sold in the fiscal year ended March 31, 2023.

    (2) Total number of companies and amounts on the balance sheet of equity holdings

    Number of
    companies
    Balance sheet amount
    (Millions of yen)
    Shares in unlisted companies 16 670
    Shares in companies other than unlisted companies 2 5,301
    ( Companies whose number of shares increased during the current fiscal year )
    Number of
    companies
    Total amount on sale
    (Millions of yen)
    Reason for increase
    Shares in unlisted companies - - -
    Shares in companies other than unlisted companies - - -
    ( Companies whose number of shares decreased during the current fiscal year )
    Number of
    companies
    Total amount on sale
    (Millions of yen)
    Shares in unlisted companies 1 0
    Shares in companies other than unlisted companies - -

    (3) Information regarding the number of shares and value on the balance sheet for each specific investment stock and stocks deemed as policy stock.

    Each specific investment stock

    Company FY2022 FY2021 Purpose of holding, quantitative impact of holding or reasons for increasing volume Holding of the Company’s stock
    No. of shares No. of shares
    Balance sheet amount
    (Millions of yen)
    Balance sheet amount
    (Millions of yen)
    Chugin Financial Group, Inc. 1,374,000 1,374,000 The Chugoku Bank, Ltd., a core bank under the group, is the main bank.To maintain a relationship with the bank for flexible financing with a view to future M&A, and to strengthening our relationships and networks in the local economy of Okayama Prefecture where Benesse was founded. No *2
    1,221 1,202
    Udemy, Inc. 3,460,308 3,460,308 To strengthen the cooperative relationship in Japan in the field of online learning platforms for working adults in the Education Business in Japan. No
    4,079 5,276
    Note: 
    • It is difficult to descrive quantitatively the impact of holdings. However, the rationality for holding is determined on a comprehensive basis, taking into account annual dividends received, valuation gain or loss on shares, net assets per share, business results, trading activity, and other economic rationality. The Board of Directors considers whether it is reasonable to continue holding or to dispose of the shares.
    • The Chugoku Bank, Ltd., a subsidiary of the Group holds shares of the Company, although Chugin Financial Group, Inc. does not hold shares of the Company.
  • 3. Shares held purely for investment purposes

    FY2022 FY2021
    Companies Balance sheet amount
    (Millions of yen)
    Companies Balance sheet amount
    (Millions of yen)
    Shares in unlisted companies 17 1,138 13 460
    Shares in companies other than unlisted companies 33 2,166 32 1,842
    FY2022
    Dividends received
    (Millions of yen)
    Gain or loss on sale
    (Millions of yen)
    Valuation gain or loss
    (Millions of yen)
    unrealized gains (losses) amount of impairment loss
    Shares in unlisted companies 4 134 - -
    Shares in companies other than unlisted companies 55 39 460 -

Implementation Status of the Corporate Governance Code

The Company implements all principles of the Corporate Governance Code.

Last updated : 2023/06/28