Japan CEOs’ Salaries Rise As Compensation Tied To Performance

(Bloomberg) -- Japanese companies are increasingly introducing performance-linked stock compensation for their CEOs, boosting what's been the major advanced economies' lowest level of top executive pay.

The median figure of Japan's chief executive officer 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 Plc. That's largely attributable to a rise in the ratio of long-term incentives, it said. 

The trend shows Japanese corporations — who have historically relied more on fixed renumeration not linked to business performance — starting to catch up with western companies amid growing expectations that management will share further interests with shareholders, it said. Still, there's a ways to go: the figure still lags significantly behind the median figure of ¥1.7 billion in the US and ¥780 million in the UK, 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 US executives made 71% of their pay through long-term incentives, the firm said. 

Willis Towers Watson surveyed 594 companies in the US, UK, France, Germany and Japan with revenue of at least ¥1 trillion.

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