On the surface, it’s a story that could have easily riled up public sentiment against bankers. Nomura’s top managers have been awarded pay rises of 79 per cent for the last fiscal year – even as net income at the firm declined by 60 per cent and the value of its shares fell to their lowest level in 37 years last November.
However, as the bank subsequently clarified, the reason for this increase was due to the payment of deferred bonuses. In a written statement the company said: “Basic compensation per head remained flat and no cash bonuses were awarded”.
Really, it’s not all that much
Deferred or not, Japanese banking chiefs typically earn a lot less than their Western peers. Nomura’s CEO Kenichi Watanabe and his team each received an average compensation of US$2.1m. To provide some perspective, Goldman Sachs CEO Lloyd Blankfein got US$12.4m last year, while J.P.Morgan’s Jamie Dimon picked up a hefty US$23m in salary and bonuses.
Katsunobu Komizo, CEO, Executive Search Partners, comments: “The news about the compensation was only for a few executives, not for many of its other senior executives. Nomura’s pay for executives is still low compared with that of American investment banks.”
Another Japanese headhunter, who declined to be named, says: “Japanese firms aren’t generous at all; most are cutting salaries, given increasingly difficult business conditions.” He reckons the move shows that Nomura isn’t about to give up on globalisation, despite a tough economic environment and worsening financial results.
Times are a-changing
John McCrohon, director of financial services, Robert Walters Japan, says salary and promotion structures in the country are traditionally reliant on years of tenure at an organisation. However this status quo is changing.
“As Japanese financial firms increase their presence in more markets overseas, this is being reflected in the shift of their remuneration structures to rely more heavily on performance-based incentives.” Hence firms that continue to implement traditional Japanese pay structures are finding it more difficult to attract good people who prefer salary schemes that reward talent, he adds.