To establish a comprehensive internal control system ensuring op erational propriety, the Gakken Group formulated a fundamental policy for its internal control system during a Board of Directors meeting in May 2006. Subsequently, in October 2006, the Group established an Internal Control Committee to oversee and implement this policy.
The execution and oversight of Gakken Group's corporate governance are the responsibilities of the Board of Directors and the Board of Corporate Auditors. The Board of Directors, led by the Representative Director, serves as the highest governance body, comprising 11 directors, including 4 outside directors (independent directors). It holds authority over matters stipulated by the Companies Act and formulates management policies concerning the entire group while also supervising the execution of duties by directors.The Board of Corporate Auditors comprises four auditors, with two being outside auditors (independent directors). To enhance audit quality and efficiency, a secretariat for the Board of Corporate Auditors has been established. Additionally, the Governance Advisory Committee, composed of external members, convenes biannually to review and provide recommendations on the Group's governance practices from an external perspective.
The Gakken Group carries out yearly GRC (Governance, Risk, and Compliance) training for all directors and staff, with a primary focus on compliance and risk management. This training primarily takes the form of e-learning and is developed in consultation with the Governance Advisory Committee, comprised of external specialists.
The training content incorporates practical instances from everyday operations. Moreover, we consistently assess the level of adherence to the Gakken Compliance Code and the Information Security Policy.
＊GRC: Abbreviation for Governance Risk Compliance.
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Period |
Number of target participants |
Number of those who completed the course |
Completion rate |
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FY9/2020 |
15,401 |
15,401 |
100% |
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FY9/2021 |
16,069 |
16,069 |
100% |
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FY9/2022 |
16,828 |
16,828 |
100% |
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FY9/2023 |
17,316 |
17,316 |
100% |
Number of compliance violations
FY9/2021: Serious violations: 0
FY9/2022: Serious violations: 0
FY9/2023: Serious violations: 0
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* is common required
■Governance Advisory Committee
The Governance Advisory Committee is composed of four external directors, two external corporate auditors, one lawyer, and one certified public accountant (not affiliated with the Company as an advisor or independent auditor). Its role is to discuss and provide reports on the Group's governance status, including internal control systems, from an impartial perspective. The Board of Directors receives biannual updates on governance matters from the Governance Advisory Committee members. Additionally, the committee offers unbiased viewpoints on the assessment of the Board of Directors' effectiveness and the reasonableness of transactions with significant shareholders, contributing to the decision-making process.
■Nomination and Compensation Advisory Committee
The Nomination and Compensation Advisory Committee holds the responsibility of maintaining objectivity and transparency in the nomination of potential candidates for the Company's Board of Directors and Corporate Auditors, as well as in the compensation of Directors. This committee comprises the President and Representative Director, along with four external directors and two external corporate auditors. Its role encompasses discussions on the appointment and removal of directors, setting compensation levels, succession strategies for the President and Representative Director, and other relevant topics. The committee subsequently presents its outcomes to the Board of Directors for consideration.
■Internal Control Committee
The Internal Control Committee is responsible for supervising the development and maintenance of the internal control system within the Gakken Group. This committee has further set up subcommittees and teams dedicated to driving efforts on critical internal control matters. These encompass compliance, information security, risk management, financial reporting control, as well as education and training. Through these specialized units, the committee strives to ensure comprehensive and effective internal control practices across the organization.
■Sustainability Committee
The Sustainability Committee has been instituted to drive the advancement of sustainability efforts, including initiatives aligned with the Sustainable Development Goals (SDGs). This committee operates through three main groups: the Integrated Disclosure Subcommittee, the Supply Chain Management Subcommittee and the Human Capital Subcommittee. These Subcommittee collectively focus on fulfilling objectives concerning critical sustainability matters (materiality), which encompass areas like climate change, business and human rights, biodiversity, and Diversity, Equity & Inclusion (DE & I). The Sustainability Committee's role is to coordinate and guide these groups toward achieving sustainability goals across the organization.
The Company's Board of Directors works to continually improve its effectiveness by evaluating and analyzing whether it is effectively fulfilling its roles and responsibilities.
In September 2022, a comprehensive questionnaire survey was administered to all directors and corporate auditors, with subsequent evaluation and analysis performed by an external entity.
The questionnaire was designed to assess various aspects, including:
- "Composition and operation of the Board of Directors" (10 questions)
- "Management and business strategies" (8 questions)
- "Corporate ethics and risk management" (4 questions)
- "Performance monitoring, management evaluation, nomination and compensation" (5 questions)
- "Dialogue with shareholders" (5 questions)
- "Evaluation of the action plan decided in December 2021" (2questions)
Each question was rated on a scale of 5 to 1, representing highest to lowest priority. Additionally, respondents were encouraged to provide comments and suggestions related to the aforementioned six major categories.
- Ratings and distribution of ratings by major category
- The average rating for all items was 4.1.
- The majority of the evaluations were positive, with only a few negative evaluations, and no significant deficiencies were noted in the comments.
- In terms of the major items evaluated, "(1) Composition and operation of the Board of Directors" was the highest relative response, and "(5) Dialogue with shareholders" was the lowest.
- Comparison of Internal and External Directors
- The average rating for all items was 0.1 points lower for internal directors than for external directors.
- The largest discrepancy was found in item (4), "Performance monitoring and evaluation of management, nomination and compensation," with a difference of 0.3 points.
- Comparison of Directors and Corporate Auditors
- The average rating for all items was 0.2 points higher for directors.
- The largest discrepancy was found in item (3), "Corporate Ethics and Risk Management," where there was a 1.0-point difference.
- Evaluation of the December 2021 Action Plan
- Based on the issues identified in the previous fiscal year, the "December 2021 Action Plan" received positive evaluations, with a combined total of 75% for evaluations rated as 5 (40%) and 4 (34%), which constitutes a significant majority. However, there were also negative evaluations, with a combined total of 9% for evaluations rated as 1 (3%) and 2 (6%), indicating a certain presence of such assessments.
- In particular, several external directors commented on the "improvement of the environment to enhance the content of deliberations," to the effect that "some improvement has been made, but further improvement is expected.
- Others
- Compared to the average of other companies of the same size (market capitalization between 25 billion yen and 100 billion yen) surveyed by an external organization, the major item (5), "Dialogue with shareholders," tended to be rated low.
- The following 9 questions were highly rated by both internal/external directors and were analyzed as being recognized as strengths of the Company. ①-1 Use of independent outside directors, ①-3 Appropriateness of agenda Items, ①-4 Annual schedule of Board of Directors meetings, ① - 6 Presentation by the agenda presenter, ① -7 Free and vigorous discussion, ②-4 Monitoring and supervision of the progress of the implementation plan, ③-1 Establishment and supervision of a code of conduct, ④-1 Relation between performance indicators and management indicators, ④-2 Number and composition of the Nominating and Compensation Advisory Committee
- The following 9 questions were analyzed as being recognized as issues for the Company, with both internal/external directors giving low ratings. ①-9 Communication between management and outside directors, ①-10 Executive training, ②-3 Discussion based on lessons learned from the past, ②-5 Effective use of management resources to generate returns in excess of the cost of capital, ② - 6 Report on the results and achievement of the proposed approval, ②-7 Initiatives for sustainable enhancement of corporate value, ⑤-1 Collaboration with stakeholders, ⑤-2 Establish a system to promote constructive dialogue with shareholders, ⑤-3 Appropriate provisions of non-financial information
- For the following six questions, the results were above average for internal executives but below average for external executives, indicating a gap in perception between internal and external executives.
①-2 Appropriate composition of the Board of Directors, ①-5 Time allocation for explanation of agenda items and questions, ①-8 Information sharing among external officers, ②-8 Verification of the appropriateness of policy shareholdings, ③-2 Effectiveness of the whistleblower system, ③-3 Establishment of a risk assessment process
Based on the results of the analysis, the Company's Governance Advisory Committee, whose members include outside experts, heard objective opinions and formulated the action plan through September 2023 as follows.
■The following two actions have been identified to address the issues highlighted within the results.
- Restructuring of the risk management process
- Sharing of risk analysis results
- Clarify and share the risk management process
- Enhance dialogue with shareholders
- Regular reports on the status of dialogue with investors
In addition to the basic skills of corporate management, finance, and legal affairs, we appoint directors and auditors with an understanding of the education and healthcare, and nursing industry and its business lines, which are the cornerstones of our business, as well as other necessary skill sets 1.Overview of Evaluation Methods in innovation, globalization, and sustainability.
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Full name |
Position in the Company |
Business Management |
Understanding Industry and Business (Education, healthcare, and nursing) |
Innovation (DX/BX) |
Global |
Finance & Legal |
Sustainability |
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Board of Directors |
Hiroaki Miyahara |
Representative Director |
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Kazuhiko Fukuzumi |
Executive Vice President |
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Hitoshi Kobayakawa |
Managing Director |
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Yoshinobu Adachi |
Director |
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Toru Goromaru |
Director |
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Kenji Momota |
Director |
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Norio Yamamoto |
Director |
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Noriaki Yamada |
Outside Director |
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Maako Kido |
Outside Director |
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Miwako Iyoku |
Outside Director |
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Caroline F. Benton |
Outside Director |
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Audit & Supervisory Board |
Yoshiaki Kageyama |
Full-time Corporate Auditor |
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Koutaro Oda |
Full-time Corporate Auditor |
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Toshiaki Yamada |
Outside Auditor |
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Ryujin Matsuura |
Outside Auditor |
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The Company has established a basic policy on compensation for directors and executive officers from the perspectives of "securing excellent human capital and motivating them to achieve goals," "sharing values with stakeholders," and "promoting compliance management."
Based on the basic policy, compensation for executive directors consists of base compensation, performance-linked compensation, and stock compensation, and is determined by the Board of Directors after deliberation by the Nomination and Compensation Advisory Committee within the limits approved at the General Meeting of Shareholders.
The level of base remuneration, which is based on position, is determined with reference to the levels of other companies, as well as the Company's employee salaries and executive officer remuneration, while the amount of individual remuneration is determined with respect to the results of annual assessments and deliberations by the Nomination and Compensation Advisory Committee. Performance-linked compensation is based on the degree of achievement of targets set at the beginning of each fiscal year based on both financial and non-financial indices. Restricted stock as stock-based compensation is granted in consideration of the Company's business environment, business performance, stock price trends, and other circumstances so that it will appropriately function as an incentive to continuously enhance the Company's corporate value.
The Board of Directors reviews the policy stock holdings once every six months, taking into account the progress of the business that has led to the purpose of the holdings and the effect on subsequent business, and comprehensively considering the benefits expected to be gained from the purpose of the holdings and the cost of capital. The Company reduces the number of stocks that it deems "not necessarily meaningful" to hold and discloses such information as appropriate.
When exercising voting rights for shares held by the Company, the Company assesses whether the proposed content will positively impact the enhancement of both its own corporate value and the value of its portfolio companies. In instances where deemed necessary, the Company initiates a dialogue with the relevant company to ascertain the intent behind the proposal. This approach ensures a well-informed and thoughtful decision-making process regarding the exercise of voting rights.
Even if a company that holds our Company's shares as part of its strategic stockholdings expresses an intention to divest its shares, we will not impede their decision by, for instance, proposing a decrease in the transaction.