Japanese top executive pay still low, unless you’re foreign – or selling wigs or pachinko machines

Pachinko machines

I often illustrate that Japanese companies are the “last functioning socialist organisations” in my seminars by pointing out that although they are very hierarchical, the top executives of Japanese companies only earn 10 or 20 times the average employee’s salary, compared to 160 times in the UK for FTSE 100 companies and more than 300 times in the USA for Fortune 100 companies.

Toyo Keizai have confirmed that this multiple still holds, by listing the highest pay differentials for TSE listed companies.  The top 10 include new technology companies such as LINE (mobile apps subsidiary of Korean internet company Naver) at #1 with a multiple of 165 between staff and director salaries and Nexon (Korean owned video games company) at #2 with a multiple of 57.7 as well as founder run companies such as Fast Retailing (Uniqlo) at #3, with a multiple of 31.4.

Foreign executives head up Nissan at #4 and Takeda at #5 – both with multiples of just over 29. The rest of the top 10 are around the 20-25 x mark with Sankyo and Universal Entertainment – both pachinko gambling machine companies at #6 and #8 and Art Nature ( a wig manufacturer) at #7. Electronics company Tokyo Electron and chain restaurant company Skylark (Chairman Ralph Alvarez ex President McDonalds) at #9 and #10.

Toyota is at #14 and after #15, multiples are below 20 and cluster around the 10x mark for established companies that are in our European Top 30 such as Sony, Daikin, Panasonic, Itochu, Astellas – through to Canon bunched with 8 others at the bottom of the Top 500 with a multiple of around 6 between employees and directors.

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