While US bosses are under fire for “fat-cat” bonuses, Japanese executives have largely avoided a row over corporate greed by cutting their own pay or even working for free during the economic crisis.
When US auto bosses were being lambasted recently for flying to Washington in private jets to plead for government aid, the head of Japan Airlines (JAL), was taking the bus to work with regular commuters.
JAL president Haruka Nishimatsu cut his own pay and even lines up with other employees for lunch in the company cafeteria.
PHOTO: AFP
At Japanese computer chip maker Elpida Memory, group president Yukio Sakamoto voluntarily went without a salary for two months last year.
He is not the only one making sacrifices. A survey by the Nikkei Shimbun daily showed that the heads of more than 200 listed Japanese firms have cut their own pay since last April.
Toyota Motor has scrapped executive bonuses this year.
Even before the recession began, Japanese bosses’ salaries were relatively modest compared with their US peers.
“Japan’s CEO compensation is much lower compared to the United States,” said Hideaki Miyajima, a corporate governance expert at Waseda University.
The main reason is that a Japanese boss is a kind of a “representative of the employees” and will have typically joined the firm as a graduate and competed with colleagues for promotion.
In this kind of situation it is hard to pay the company head significantly more than colleagues of a similar age, he said.
In fact, a chief executive in the US earns about four times as much as a Japanese CEO, according to a survey by the human resources firm Towers Perrin published in 2006.
Japanese executives in general do not flaunt their wealth and bosses are often quick to step down when things start to go wrong.
Indeed, the presidents of companies including Toyota, Sony, Toshiba, Honda and Hitachi have all recently bowed out.
The humble approach in Japan has helped executives to avoid the kind of backlash seen in the US over corporate excess.
The woes of once-mighty US firms have prompted debate in Japan over whether firms should put the brakes on a slow shift towards Western-style practices, such as performance-related pay.
“Japanese corporate culture is in a bit of an identity crisis at the moment,” said Noriko Hama at Doshisha Business School in Kyoto.
“I think there is a lot of soul-searching about the way companies were headed before this crisis hit. A lot of Japanese executives were saying, ‘We need to get away from the old Japanese way of doing things.’ That’s really starting to change again but nobody really knows where to go from here,” he said.
Experts say that the row in the US over the multimillion-dollar bonuses paid out by insurance giant AIG after being bailed out by Washington is likely to make Japanese firms remain wary about linking pay to performance.
One prominent US Senator even suggested that top AIG executives ought to quit or commit suicide, which he described as the Japanese model of taking responsibility.
Japan has not had to save its banks or automakers from collapse but companies including Toyota and Honda have said they may apply for government loans because of difficulties raising credit.
And while they have avoided a row over their pay, Japanese companies have angered workers with a wave of layoffs.
“People do feel that the corporate leadership has become very disloyal to the workers. It is that aspect that they find the most unforgivable,” Hama said.
Japanese companies “had a lot of surplus cash that they chose to keep and to get rid of people. The workers saw that as a betrayal,” he said.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San