Nomura has been in the news for something very un-Japanese: the multi-million dollar golden handshake it has given to one of its top executives.
According to a recent report in the Financial Times, the bank gave Sadeq Sayeed, a former chief executive of the company’s European business, a generous $34m payoff after his resignation in March. The FT says this figure was likely to include accelerated stock awards and pension-related payments.
Though modest by Western standards, especially compared with payouts such as the whopping $73m package Bank of America’s former chief executive received last year, this level of payoff is a rarity in Japan.
But could Nomura’s willingness to shell out on Sayeed be a sign that things are changing?
Probably not, according to Melissa Kuwahara, practice leader for the financial services team at recruitment firm CDS.
She says among her clients and candidates she hasn’t even heard of any severance packages at the Japanese banks. And that’s because they prefer to cut compensation before headcount.
“Overall, the way Japanese banks managed during the downturn was significantly different to foreign banks. Most of the Japanese banks reduced senior executive pay and kept their employees to ride out the storm, while foreign banks used it as an opportunity to thin out the director and MD ranks and were happy to lay off and rehire later if/when the market returned,” she says.
As well as bonuses not being paid in some cases, Kuwahara says J-banks were reducing salaries by 10 to 20 per cent across all levels. “Sometimes it was even higher at the top.”