Plans for executive pay disclosure unveiled in Japan

16 February 2010

Japan's Financial Services Agency has unveiled new regulations designed to improve corporate governance by overhauling the disclosure rules for public companies.

Under the new system, firms will be required to disclose pay details for executives whose remuneration packages total more than 100 million yen (£702,000) a year.

Commenting on the move, Takeyuki Ishida of advisory firm RiskMetrics Group told Reuters that a compensation system that traditionally rewards seniority over performance remains the most pressing issue in Japan.

"Of course disclosure itself is a good thing, but the problem in Japan is not the absolute level of executive pay. It is the fact that pay is not sufficiently tied to performance," he commented.

The issue of remuneration has not attracted the same level of attention in Japan as it recently has in the US and UK, as executive salary levels in the country remain modest by global standards.

However, last year the Asian Corporate Governance Association warned that governance standards in the nation had reached "a fairly critical state".