TOKYO • In Japan, expatriates rule when it comes to the biggest pay packages. Foreigners held eight of the top 10 spots on Bloomberg's ranking of the country's best-paid executives last year.
SoftBank Group's former chief operating officer, Mr Nikesh Arora, whose 8 billion yen (S$102 million) package topped the list, hails from India. Mr Joseph DePinto, a director of Seven & i Holdings who came in second, and Mr Ronald Fisher, a director at SoftBank who ranked third, are both Americans.
United States-sized pay packages have long been considered taboo in Asia's second-largest economy. Higher wages in Japan were typically earned by sticking around, thanks to rigid corporate promotion systems based on tenure.
"Traditionally, Japanese employees have been expected to remain at one company and have their salaries go up based on seniority instead of performance," said Mr Ryota Kimura, a general manager at Japan Exchange Group and the bourse's chief representative in New York. "Foreigners don't fit into that system."
In Japan, raises have traditionally been tied to length of employment, eliminating the option to get better pay by switching roles.
Bosses have also enjoyed more job security than their Western colleagues since interlocking shareholdings between Japanese companies helped create a static environment that was not conducive to change.
Some companies have abandoned the country's modest pay practices to attract foreign hires.
Mr Arora was recruited to SoftBank from Google and became one of the world's best-paid bosses in 2014 with a 16.6 billion yen package, a record in Japan.
The US is on the opposite side of the spectrum, with CEOs at S&P 500 Index companies receiving an average of 60 per cent of their target pay in equity awards, much of it tied to performance metrics, according to the Bloomberg Pay Index.
Changes might be coming in Japan. The government introduced a set of corporate governance practices last year in an effort to make businesses boost investor returns and increase boardroom diversity and transparency.
The code includes a provision recommending that executives get paid both in cash and stock, with some compensation tied to longer-term goals.
BLOOMBERG
