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[Thick Thighs Save Lives]

Japanese game company GungHo Online Entertainment, best known for their hit mobile title Puzzle & Dragons, has rejected a proposal from shareholders that highlighted numerous issues with the company (as reported by ITMedia). These issues included the rising pay of its CEO, which is nearly on par with Nintendo’s, despite GungHo’s smaller scale and declining profits.

At the end of January 2025, Strategic Capital, which owns about 5.4% of GungHo, submitted a somewhat salty and lengthly proposal to the company, calling on it to “up its game.” The report highlighted how GungHo continues to rely heavily on their 2012 release Puzzle & Dragons and has yet to produce another hit, despite investing over 100 billion yen (over 640 million dollars) in the development of new titles. It also pointed out how CEO Kazuki Morishita’s pay has increased from 120 million yen to 340 million yen (over $2.2 million dollars) over the last decade, despite the company’s operating profits declining by 69% (for reference, the report notes that global giant Nintendo’s CEO makes 360 million yen).

Strategic Capital proposed 7 key points for change, including an overhaul of GungHo’s renumeration system and far more transparency – calling for changes in executives’ pay to be disclosed and explained.

In their response, GungHo announced that their Board of Directors (including outside directors) unanimously voted to reject all of Strategic Capital’s proposals on February 14.

GungHo outlines reasons for rejecting each of the proposals. Regarding CEO Morishita’s pay, they argue that the shareholders’ argument “fails to recognize the role that President Morishita has played in achieving the company’s growth, while leading the company’s business as its de facto founder for over 20 years.” Expanding on this point, GungHo’s statement highlights how Morishita brought Ragnarok Online, and has continuously directed Puzzle & Dragons, maintaining the IP’s popularity for 13 years.

Regarding the criticism that GungHo has yet to make another game that matches Puzzle and Dragons’ popularity, the company argues that the shareholders don’t understand how highly competitive the mobile game market is and how hard it is to create enduring hits in such an overcrowded market.

As for the shareholders’ proposals regarding the renumeration system, GungHo responded that their current process for determining base renumeration is already appropriate and transparent enough, and that the level of disclosure requested in the shareholders’ proposal would exceed legal requirements.

Although they rejected Strategic Capital’s proposals, GungHo has made some changes. It altered its Shareholder Return Policy on February 14, aiming to combine stable dividends with flexible share buybacks “in order to implement a more proactive profit return to our shareholders.” It also revised renumeration policy on the same day, announcing that it will appoint independent outside directors to the committee that determines renumeration.

On the same day, GungHo released its financial results for the 2024 fiscal year (January to December 2024), which were down across the board:

Sales: 103,6 million yen (down 17.3% year-on-year)
Operating profit: 17,491 million yen (down 37.3% year-on-year)
Ordinary profit: 20,013 million yen (down 31.7% year-on-year)
Net profit: 11,171 million yen (down 32.7% year-on-year)

Japanese gacha game company dismisses criticism of its “CEO’s salary being on par with that of Nintendo’s,” rejecting shareholder reform proposals - AUTOMATON WEST

Puzzle & Dragons' developer GungHo has rejected a proposal from shareholders that highlighted numerous issues with the company.

automaton-media.com

 

[Thief1987]

How he can earn 340 million salary if their annual sales are 103.6? 103.6 billion, I guess?

 

[Sakura]

despite investing over 100 billion yen (over 640 million dollars) in the development of new titles.

How do you spend 640 million dollars developing games with nothing to show for it? You could make a bunch of decent non-gacha games that I'm sure would at least break even. Or you could open a publishing arm and just through money at promising looking indies or something. Hell, they could just've thrown a quarter of that into bitcoin and be doing well. I would be pretty salty too if I was an investor.

 

[Hudo]

I am torn on this: On one hand, it's cool to fuck over investors; almost all of them deserve it. On the other hand, CEOs getting rewarded for doing a bad job (which he apparently does) is bullshit and needs to stop.

 

[Perrott]

How do you spend 640 million dollars developing games with nothing to show for it? You could make a bunch of decent non-gacha games that I'm sure would at least break even. Or you could open a publishing arm and just through money at promising looking indies or something. Hell, they could just've thrown a quarter of that into bitcoin and be doing well. I would be pretty salty too if I was an investor.

640M ain't shit, especially for a publisher such as GungHo over a period of nearly 15 years.

Sony spent much more than that on the live-service titles they've canceled or taken offline over the past 12 months alone, including Concord, Twisted Metal, God of War, Destiny "Payback" and new IPs from Bend and London Studio. Literally half their promised slate of live-service projects.

Now that is having nothing to show for your investment.

 

[Shubh_C63]

CEO Kazuki Morishita’s pay has increased from 120 million yen to 340 million yen (over $2.2 million dollars) over the last decade

Even mighty American CEOs sneezes are over 2 million dollars. America No.1

But really, Nintendo is just an insane anomaly of tight business practices. One of the biggest things in the world and CEO earns quite modest.

 

[StereoVsn]

Considering crap performance that this CEO apparently have had over the years, salary going up seems Suspect.

That is especially so considering almost no general wage rise in Japan for most of last 15 years with some exception for last 3-4.

 

[Hudo]

That is especially so considering almost no general wage rise in Japan for most of last 15 years with some exception for last 3-4.

I didn't know that. Interesting.

 

[StereoVsn]

I didn't know that. Interesting.

Yeah, only in recent few years the inflation started to grow which also helped (somewhat) with wage growth. But even that has been mainly restricted to large businesses.

 

[Hudo]

Yeah, only in recent few years the inflation started to grow which also helped (somewhat) with wage growth. But even that has been mainly restricted to large businesses.

I was just about to ask how they deal with inflation. Do they have something like minimum wage in Japan?

 

[StereoVsn]

I was just about to ask how they deal with inflation. Do they have something like minimum wage in Japan?

I think the amount varies by prefecture. Looks to be in general around $7 USD in hour +/- a but depending on the prefecture.

Last year seems to have been “large” increase by whole ¥50. Which is about $0.35…. Now, that’s according to Gemini, so who knows. And I think minimum wage also varies by industry.

 

[A.Romero]

I was just about to ask how they deal with inflation. Do they have something like minimum wage in Japan?

Japan is a very special case where deflation has been common for a while but it seems it changed recently.

 

[Stitch]

Woah Puzzle & Dragons is still alive!?

nvm not available in my region..

 

[Hudo]

I think the amount varies by prefecture. Looks to be in general around $7 USD in hour +/- a but depending on the prefecture.

Last year seems to have been “large” increase by whole ¥50. Which is about $0.35…. Now, that’s according to Gemini, so who knows. And I think minimum wage also varies by industry.

Japan is a very special case where deflation has been common for a while but it seems it changed recently.

Thanks, lads. I have learnt something new today.

 

[justiceiro]

Lmao, Nintendo making hard for every greedy executive to receive their absurd high salary.

But it seems that this company should never opened capital if wanted to keep everything to themselves.

 

[Sakura]

640M ain't shit, especially for a publisher such as GungHo over a period of nearly 15 years.

Sony spent much more than that on the live-service titles they've canceled or taken offline over the past 12 months alone, including Concord, Twisted Metal, God of War, Destiny "Payback" and new IPs from Bend and London Studio. Literally half their promised slate of live-service projects.

Now that is having nothing to show for your investment.

The 640m isn't about them running out of money (they have tons of cash reserves apparently), but that they haven't been able to achieve any success other than Puzzles and Dragons which is 13 years old and has been declining for a while now. People invest in a company expecting to see growth.
Sony cancelled a bunch of live service games sure, but overall Playstation revenue was still up and Q3 was their highest revenue ever iirc, so it is kind of irrelevant.