Japanese companies are increasingly introducing performance-linked stock compensation for their CEOs, boosting what¡¯s been the lowest level of top executive pay among major advanced economies.
The median figure for Japan¡¯s CEO compensation rose 34% to ?270 million ($1.8 million) in fiscal 2022 from a year earlier, according to a survey released Thursday by Willis Towers Watson. That¡¯s largely attributable to a rise in the ratio of long-term incentives, it said.
The trend shows Japanese corporations ¡ª who have historically relied more on fixed remuneration not linked to business performance ¡ª starting to catch up with western companies amid growing expectations that management will share further interests with shareholders, it said. Still, there¡¯s a way to go: the figure still lags significantly behind the median figure of ?1.7 billion in the U.S. and ?780 million in the U.K., according to the survey.
The ratios of basic remuneration, annual incentives and long-term incentives among Japanese executives were roughly equal in the 2022 fiscal year, while U.S. executives made 71% of their pay through long-term incentives, the firm said.
Willis Towers Watson surveyed 594 companies in the U.S., U.K., France, Germany and Japan with revenue of at least ?1 trillion.
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