xcel
02-10-2009, 11:58 AM
For one thing, Japanese executives don't earn nearly as much as Westerners—and the implications are far-reaching. (businessweek.com/globalbiz/content/feb2009/gb20090210_949408.htm?chan=top+news_top+news+index+-+temp_global+business)
http://www.cleanmpg.com/photos/data/501/AIG.jpgKenji Hall – Business Week (Businessweek.com) – Feb. 10, 2009
Consider the $138 Billion in Government funds to keep AIG solvent so far while the former AIG CEO received $47 Million to go away...
Why would Business week defend the American Executive pay model with Stock prices in some cases at 50 year lows and execs still being paid an exorbitant sum :confused: -- Ed.
In recent weeks, the news from Japan Inc. has been a steady drumbeat of layoffs, plant shutdowns, and gloomy earnings forecasts. Yet few CEOs have been shown the door. And there are scant signs that the public and political outcry against CEOs' fat pay packages in the U.S. will be echoed in Japan.
That's because most Japanese chief executives don't earn anywhere near the big paychecks of their Western counterparts. CEOs at Japan's top 100 companies by market capitalization earned an average of around $1.5 million, compared with $13.3 million for American CEOs and $6.6 million for European chief execs at companies with revenues of higher than $10 billion, according to an analysis of 2004-06 data by Towers Perrin, a Stamford (Conn.) human resources firm.
It shows, too. Japan's corporate bigwigs might travel around in chauffeured cars and play golf on the company's dime, but they don't trot around in designer suits, shuttle between cities in private jets, or order up multimillion-dollar houses. And the moment the company's profits plunge, they often take one for the team. Last month, Sony announced plans to halve the pay packages for Chairman and CEO Howard Stringer and his top lieutenants, while Honda has said its board members will take a 20% pay cut.
Diminished Sense of Responsibility?
Is it time for Americans, then, to imitate the Japanese? Executive compensation experts wouldn't advise it. Japan's system is hardly ideal, they say. In fact, many Western investors argue that Japanese executives get paid too little and that performance should be a bigger factor in determining compensation packages. On average, only about a third of Japanese executives' income comes from stock-option grants (which weren't possible until deregulation in the late 1990s) and bonuses linked to financial metrics such as return on equity and revenue growth, says Naohiko Abe, head of Towers Perrin's Japan office.
Contrast that with the U.S., where the ratio is around 80%, and Europe, where it's 60% to 70%. "If they're not paid enough, they feel that they can't be blamed for bad performance," says Barclays Global Investors strategist Takaaki Eguchi. "As investors, we want a system where they're sufficiently paid but also take full responsibility for what they've done." … http://www.businessweek.com/globalbiz/content/feb2009/gb20090210_949408.htm?chan=top+news_top+news+index+-+temp_global+business
http://www.cleanmpg.com/photos/data/501/AIG.jpgKenji Hall – Business Week (Businessweek.com) – Feb. 10, 2009
Consider the $138 Billion in Government funds to keep AIG solvent so far while the former AIG CEO received $47 Million to go away...
Why would Business week defend the American Executive pay model with Stock prices in some cases at 50 year lows and execs still being paid an exorbitant sum :confused: -- Ed.
In recent weeks, the news from Japan Inc. has been a steady drumbeat of layoffs, plant shutdowns, and gloomy earnings forecasts. Yet few CEOs have been shown the door. And there are scant signs that the public and political outcry against CEOs' fat pay packages in the U.S. will be echoed in Japan.
That's because most Japanese chief executives don't earn anywhere near the big paychecks of their Western counterparts. CEOs at Japan's top 100 companies by market capitalization earned an average of around $1.5 million, compared with $13.3 million for American CEOs and $6.6 million for European chief execs at companies with revenues of higher than $10 billion, according to an analysis of 2004-06 data by Towers Perrin, a Stamford (Conn.) human resources firm.
It shows, too. Japan's corporate bigwigs might travel around in chauffeured cars and play golf on the company's dime, but they don't trot around in designer suits, shuttle between cities in private jets, or order up multimillion-dollar houses. And the moment the company's profits plunge, they often take one for the team. Last month, Sony announced plans to halve the pay packages for Chairman and CEO Howard Stringer and his top lieutenants, while Honda has said its board members will take a 20% pay cut.
Diminished Sense of Responsibility?
Is it time for Americans, then, to imitate the Japanese? Executive compensation experts wouldn't advise it. Japan's system is hardly ideal, they say. In fact, many Western investors argue that Japanese executives get paid too little and that performance should be a bigger factor in determining compensation packages. On average, only about a third of Japanese executives' income comes from stock-option grants (which weren't possible until deregulation in the late 1990s) and bonuses linked to financial metrics such as return on equity and revenue growth, says Naohiko Abe, head of Towers Perrin's Japan office.
Contrast that with the U.S., where the ratio is around 80%, and Europe, where it's 60% to 70%. "If they're not paid enough, they feel that they can't be blamed for bad performance," says Barclays Global Investors strategist Takaaki Eguchi. "As investors, we want a system where they're sufficiently paid but also take full responsibility for what they've done." … http://www.businessweek.com/globalbiz/content/feb2009/gb20090210_949408.htm?chan=top+news_top+news+index+-+temp_global+business