Average pay of Japanese CEOs is one-seventh that of CEOs in U.S

[marmar]

via michaelmoore.com:



July 7th, 2010 7:10 PM
In Japan, Underpaid—and Loving It
New regulations reveal just how little Japanese chiefs earn. "There's no market for executives," says one compensation expert

By Jason Clenfield / Business Week


Japan is the land of the bargain-basement CEO. On June 30 securities regulators began requiring Japanese companies to disclose pay for executives making more than 100 million yen ($1.1 million). While the headlines went to the top earners—foreigners Carlos Ghosn of Nissan Motor and Sony's Howard Stringer—the big surprise was how few Japanese business leaders take home super-size paychecks.

Although pay for Japanese executives has more than doubled in the past decade, the government says, fewer than 300 people at Japan's 3,813 public companies earned enough in 2009 to require disclosure, according to PricewaterhouseCoopers. Companies listed on Japan's stock exchanges paid their chief executives an average of $580,000 in salary and other compensation last fiscal year, PWC estimates, about 16 times more than the typical Japanese worker. Average CEO pay at the 3,000 largest U.S. companies is $3.5 million, including stock options and bonuses, according to the Corporate Library, a research group.

A drawback of Japan's low pay is that it's harder to recruit abroad because junior executives overseas can end up with higher salaries than their peers—or bosses—at headquarters. "They have to make a special case for hiring a VP who's making more than the president," says Motohiro Morishima, a professor of human resources at Hitotsubashi University. At Takeda Pharmaceutical in Osaka, the CEO takes home $2.5 million—half as much as the U.S. sales chief.

Most Japanese bosses have been hired from inside their companies. "There's no market for executives," says Kotaro Tsuru, a corporate governance expert at the Trade Ministry's research institute. "The reasonable price for a CEO is decided by each firm separately." Nissan's Ghosn, Japan's top-paid CEO, took home $10 million in 2009. Over at Toyota Motor, meanwhile, Chairman Fujio Cho earned $1.5 million. CEO Akio Toyoda wasn't among the four executives who received more than $1.1 million (though as the founder's grandson, he owns about $160 million in company shares). Sony's Stringer, Japan's second-highest-paid executive, made $9.1 million. At rival Panasonic, nobody earned enough to require disclosure under the new rules.

With wealth still considered unseemly in Japan, there's little pressure for salaries to rise. "My house is small, but I'm happy," says Yukio Sakamoto, CEO of Elpida Memory, Japan's largest semiconductor maker, whose pay was under the reporting threshold. "I commute by train every day and have never had a problem."


http://www.michaelmoore.com/words/latest-news/japan-underpaidand-loving-it

[melm00se]

1. this quote

Most Japanese bosses have been hired from inside their companies. "There's no market for executives," says Kotaro Tsuru, a corporate governance expert at the Trade Ministry's research institute. "The reasonable price for a CEO is decided by each firm separately."

is the key.
No market = no external demand.
No external demand = no competition
no competition = no upward "pricing" pressure

the only chance you have to be an executive is to move up within the company and if that company is "the only game in town" then the company dictates the compensation terms.

this has some definite upsides and downsides. Among things on the upside - the company can more easily control their compensation costs. Among things on the downside - you create a certain level of inbreeding which can lead to it's own issues

[av8rdave]

2. I had a conversation once with someone once who had to meet the CEO

of a major Japanese firm. She said his office was identical to hers, including shared space with other execs. In Japan, the CEO is another employee (albeit with greater responsibilities) who still has to answer to the Board of Directors (unlike many US CEOs, who are WAY too close to the board members).

What a concept!

[Odin2005]

3. Many CEOs are on the boards of one or more other corporations already.

It's an Old Boy's club, positions are given out by connections and class, not management ability.

[HughBeaumont]

4. Be on this for a couple of hours to see how bad it really is.

http://www.theyrule.net/

[Odin2005]

9. Wow, thanks!

[ParkieDem]

8. Actually,

Japanese boards are immensely more insular than US boards.

That's one reason why Toyota has been so slow in responding to all of the problems with its vehicles -- its board is extremely close-knit, made up mostly of people who have worked for Toyota for years. The insular culture at Toyota is so ingrained, they were paranoid of admitting even the smallest of mistakes. And look where that got them.

The real issue here is that Japanese culture, by and large, frowns on ostentation. That's why their bosses stay with the same company forever, and don't make as much money as their counterparts in other countries.

[stray cat]

5. relative to their employees?

[activa8tr]

6. And by and large, they do a MUCH BETTER JOB! Let' outsource

all CEO jobs to Japan and save corporations billions!!!!..... (sarcasm)

[denverbill]

7. I don't know why you added the sarcasm tag.

Until we outsource our over-priced management, we will never get outsourcing stopped.