• Kyodo News


The season for shareholders’ meetings has peaked, with the focus this year on how much top executives were paid in fiscal 2009 through March.

A total of 1,087 firms, including unlisted ones, held shareholders’ meetings nationwide Tuesday, the National Police Agency said. Among the listed companies, which closed their books in March, about 740, or more than 40 percent, held shareholders meetings on the same day.

With companies on track for recovery following the global economic slump, shareholders and corporate investors paid close attention to executive compensation, examining if the pay was commensurate with corporate performance.

Companies holding their meetings Tuesday included Hitachi Ltd., Mitsubishi Electric Corp., Suzuki Motor Corp., Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.

At Hitachi’s meeting in Tokyo, President Hiroaki Nakanishi apologized for not paying an annual dividend for fiscal 2009. At the same time, the company said Chairman Takashi Kawamura was paid ¥134 million in executive compensation.

Under new regulations on corporate disclosure, listed companies must reveal in financial statements the names of executives who make at least ¥100 million a year and break down their compensation packages, including basic salary, retirement payments and stock options.

Although companies are not required to tell shareholders directly about executive compensation, many have chosen to disclose the figures to them, either voluntarily or when asked. Some companies have resorted to giving only the combined compensation of an executive or its executives and not a detailed breakdown.

“It is now the time when management bears the responsibility to explain how executive compensation is decided,” said Yuzo Fujishima, a senior researcher with the Daiwa Institute of Research.

Among executive compensation packages revealed so far, Nissan Motor Co. President Carlos Ghosn’s package, worth about ¥890 million, was the highest, followed by Sony Corp. Chief Executive Officer Howard Stringer, whose package amounted to around ¥816.5 million.

Sega Sammy Holdings Inc.’s Hajime Satomi was the third-highest-paid CEO in Japan, and effectively the highest-paid Japanese CEO, with ¥435 million.

In the face of criticism that their pay is exorbitant, executives have sought to justify their hefty salaries and benefits.

“We are a Japanese company, but we have global management,” Ghosn said after Nissan’s annual shareholders’ meeting last week, in which Ghosn himself revealed details of executive compensation before the question-and answer-session with shareholders.

Ghosn said that there is “nothing out of line” in Nissan’s executive compensation when comparing it to global standards, noting his compensation is actually “below average” of his world counterparts at nearly $12 million.

In 2009, Ford Motor Co. CEO Alan Mulally was the highest paid in the auto industry with $17.9 million.

For growth especially in emerging markets, Nissan needs to pool the best talent in and out of Japan, said Ghosn, who also acts as CEO of Nissan’s alliance partner, Renault SA of France.

Honda Motor Co. President Takanobu Ito had a compensation package worth ¥115 million, while industry leader Toyota Motor Corp. Chairman Fujio Cho earned ¥132 million.

Other executives who earned at least ¥100 million included those from Nomura Holdings Inc., trading house Itochu Corp. and Mitsubishi Heavy Industries Ltd.

According to the Financial Services Agency, the average compensation for executives of listed companies is about ¥25 million. It is estimated that only a handful of people, mostly foreign managers, are receiving more than ¥100 million.

Some shareholders complained about not having received any dividend for fiscal 2009 when the pay for executives was so high.

While many firms have said they are likely to swing into the black for the current business year, it remains uncertain whether their profitability will be sustained without cost-cutting, analysts say.

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