TOKYO (Bloomberg) -- The combined compensation of the heads of Japan’s three largest carmakers was less in 2009 than that of Ford Motor Co.’s Alan Mulally, the world’s top-paid auto chief.
Akio Toyoda, president of the world’s largest carmaker, wasn’t named in a company filing to Japan’s finance ministry today, indicating his compensation last fiscal year was less than 100 million yen ($1.1 million). Nissan Motor Co.’s Carlos Ghosn earned 891 million yen and Honda Motor Co.’s Takanobu Ito was paid 115 million yen, the companies have said.
Toyoda and Ito are dwarfed by their global peers, who on average earn about $12 million, according to Towers Watson & Co., a U.S. benefits consultant. Mulally led the pack with $17.9 million in 2009, according to data compiled by Bloomberg.
“Because of globalization, competition is intensifying, and there is a greater importance placed on strong and decisive management,” said Katsuyuki Kubo, an associate professor of economics at Waseda University in Tokyo who specializes in compensation and corporate governance. “Without the pay incentive, Japan could lose out on competitiveness.”
Toyota’s top executives, including Toyoda, took pay cuts and gave up bonuses as the carmaker recalled more than 8 million vehicles worldwide to fix defects linked to unintended acceleration. Toyoda said yesterday he worried that he would have to step down as president ahead of U.S. Congressional hearings on the recalls in February.
“I was feeling enormous pressure and was full of anxiety as I went in to bring up the rear of this losing battle,” he told shareholders at the company’s annual meeting in Toyota City, where the company is based.
Toyota’s top 38 executives received an average of 53.1 million yen each in salary and stock options for the year ended in March, the company said yesterday. That’s a 30 percent decline from the previous year.
$162 million in shares
Four executives were named in the filing: Chairman Fujio Cho, earning 132 million yen in salary and stock options; Vice Chairman Katsuaki Watanabe, paid 114 million; Vice Chairman Kazuo Okamoto with 108 million yen; and North American president Yoshimi Inaba with 124 million yen.
New regulations require publicly traded Japanese companies to disclose the compensation of individuals who earn more than 100 million yen.
Toyoda, the grandson of Toyota’s founder, owns 4.564 million shares in the carmaker, valued at about $162 million, according to data compiled by Bloomberg. That compares with Ito’s $362,000 of Honda shares and Ghosn’s $31 million in Nissan and Renault SA shares, according to the data.
‘Felt like criminals’
In the fiscal year ended in March, Honda was Japan’s most profitable carmaker, earning 268 billion yen in net income, beating Toyota’s 209 billion yen and Nissan’s 42 billion yen.
Toyoda described in detail the days he spent preparing for his testimony before a Congressional committee on Feb. 24. He spent four days at a Toyota dealer’s home near Washington D.C. with Inaba and U.S. sales chief Jim Lentz, he said.
“We were confined there and felt like criminals,” he said. “We crammed from morning to late at night, and I thought I might become ill.”
A shareholder admonished Toyoda for shedding tears in public after the hearing and encouraged him to do his best in leading the company.
“Please understand those were tears of joy,” Toyoda said. “I received such warm words of encouragement from our suppliers and customers. I realized I was protected by the very people I was trying to protect.”