There is good news for CEOs of Japan’s biggest businesses, with executive pay for the top bosses rising an average of 33% in fiscal year 2022.
While this figure may seem eye-watering, it actually reflects a growing need for Japanese compensation to catch up with many advanced economies.
Let’s put this into context. While Japan’s CEO compensation rose to a median of US$1.8 million, media CEO pay in the UK is three times that at US$5.4 million. Better (or worse) still, in the US that figure rockets to US$11.7 million.
That’s according to the latest research from global consultancy Willis Towers Watson (WTW) which suggests a rise in long-term incentives for Japan’s CEOs who have traditionally relied more upon fixed pay rather than performance-related pay.
Japan executive pay plays catch-up with western companies
Now Japanese firms are playing catch-up with their western counterparts as top management are expected to focus more on shareholders. In fiscal 2022, Japanese bosses had an even split of basic remuneration, annual incentives and long-term incentives.
Long-term incentives rose to 32% from 26%. US executives, meanwhile, had 71% of their pay via long-term incentives.
“It is necessary to determine not only the level of stock compensation, but also the conditions for linking it to performance and setting the level of difficulty,” said Yuki Sato, a consultant at WTW.
Sato cited the example of Hitachi, which adjusted compensation based on the company's stock price performance versus that of overseas competitors.
While Japan’s executive pay showed the biggest rise, it still lags behind the US, UK, Germany, and France.
WTW surveyed 594 companies in those countries with revenue of ¥1 trillion (US$6.9 billion).
You may also be interested in the Business Chief EMEA website.
Please also check out our upcoming event – Sustainability LIVE in London on September 6-7, 2023.
BizClik is a global provider of B2B digital media platforms that cover executive communities for CEOs, CFOs and CMOs, as well as leaders in Sustainability, Procurement & Supply Chain, Technology & AI, Cyber, FinTech & InsurTech. We also cover industries including Manufacturing, Mining, Energy, EV, Construction, Healthcare and Food & Drink.
BizClik, based in London, Dubai and New York, offers services such as content creation, advertising and sponsorship solutions, webinars and events.
- 15 CEO insights from Forbes Global CEO Conference SingaporeLeadership & Strategy
- Uniqlo shakes up leadership amid global retail ambitionsCorporate Finance
- Seven CEOs on how they approach decision makingLeadership & Strategy
- Top 10: Singapore's most transformational CEOsLeadership & Strategy