Listed companies reveal executive pay
The global recession has sparked debate on executive compensation. Countries have been moving to reveal the pay of top earners.
The Financial Services Agency in Japan now requires listed Japanese companies to disclose the names and salaries of employees earning over 100m yen. Among the top of the list is Sony’s Sir Howard Stringer, who received about 410m yen last financial year. Stringer’s remuneration is not out of line with US or European executive standards though, which between 2004-2006 were at least 4.4 times that of Japanese, according to Towers Watson. Carlos Ghosn, head of Nissan, is also believed to be paid more than the standard Japanese executive, having come from Renault.
But the FSA may have set the threshold too high. According to an April report by PriceWaterhouseCoopers only 8.3% of presidents and 1.4% of executives of Japanese listed companies were paid above the mark. The Wall Street Journal reports that Toyota may not have to reveal any of its executives’ pay.
The Japanese public appears unfazed. “I hope Japanese executives would come to make as much money [in the future], not just [Nissan CEO Carlos] Ghosn and Stringer,” says an accountant in his 30s to Japan Realtime. He isn’t alone in this view; at the government roundtable held by the Economist last year, Rakuten CEO Mikitani held similar sentiments. He believes Japanese executives should be paid more to increase their competitiveness.
The pay gap between executives and average workers continues to be criticized globally though. General secretary of the UNI global union, Philip Jennings, said at the Davos Economic Forum that there was no evidence CEOs today performed better than those 30 years ago; they are merely “exploiting the system”. French President Sarkozy was of like mind: "It is morally indefensible and we can't allow a tiny minority to skew the system."
The average male graduate in Japan makes 300m yen in their entire life, and a female graduate 260m yen, states a report in March by the Japan Institute for Labour Policy and Training.
But the gap may shrink. Revealing executive salaries will fuel further tension between shareholders, unions and executives, especially in today’s economic climate. Companies will be trying to explain the reasoning behind their numbers.