Sun, Nov 04, 2007 - Page 11 News List

Executive exodus signals growing pains for Toyota

JAPANESE PAY GAPWhile GM's Rick Wagoner received US$9.57 million in compensation last year, Nissan board members received an average of just more than US$2 million


In just the last three months, three senior executives in Toyota's North American business abruptly left for rivals. The high-profile defections underline a new danger looming for the Japanese automaker -- the lure of US companies wooing the best in its ranks.

The executive exodus signal Toyota Motor Corp's growing pains overseas. It now sells three-quarters of its vehicles outside Japan and runs more than 50 manufacturing plants abroad, including five vehicle-assembly plants in the US.

Having its top talent poached by rivals would have been unimaginable for Toyota even a decade ago, when the Japanese automakers were still playing catch-up with US companies. Now, Japan's traditions of lifetime employment and employee loyalty are growing obsolete as globalization introduces new career issues -- the rewards of bigger money and the lack of promotion opportunities for outsiders.

"This is a new challenge for Toyota in overseas management: How to make its best people stay," said Yasuaki Iwamoto, auto analyst with Okasan Securities Co.

The most stunning job hop came from Jim Press, 61, the former head of Toyota's North American operations, who left in September to become president and vice chairman of Chrysler LLC. Press' promotion as the first non-Japanese board member at Toyota had been approved with fanfare just three months earlier.

Another was Jim Farley, 45, a 17-year veteran and group vice president and general manager of Toyota's Lexus luxury division in the US. He is joining Ford Motor Co in November as group vice president of global marketing and communications.

Deborah Wahl Meyer also jumped to Chrysler to become vice president and chief marketing officer. Meyer, 44, had spent the last six years at Toyota, most recently as vice president of marketing for Lexus.

Japanese companies have long been reticent about promoting foreigners. Two exceptions are Sony Corp, which named Howard Stringer, a Welsh-born US citizen, as its chief executive in 2005 and Brazilian-born Frenchman Carlos Ghosn, the chief executive at Nissan Motor Co following a 1999 management takeover by Renault SA of France. Other major companies, including Honda Motor Co, still have no foreigners on their boards.

Besides questions about the openness of Japanese corporate culture to foreigners, speculation has also been rife the Toyota defectors were wooed with big money. Toyota does not disclose executive pay, but Japanese executives are believed to make just a fraction of what their US counterparts make.

General Motors Corp chairman and chief executive Rick Wagoner, for example, received US$9.57 million in compensation last year, including salary and stock options. By comparison, the nine board members at Nissan received a combined US$21.8 million, averaging US$2.4 million each.

Chrysler hasn't commented on Press' compensation, but said it will be tied to the automaker's turnaround performance.

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