Carlos Ghosn, Japan's highest-paid corporate executive, said fat paychecks go part and parcel with rewarding talented personnel and competing with international rivals.
The 58-year-old president of Nissan Motor Co. said automakers need to attract the best and the brightest with pay scales based on global standards.
Ghosn spoke under the theme of "Global Leadership and Crisis Management" before a crowd of about 480 people, mainly students at Keio Business School, in Yokohama on June 19.
Asked if fat paychecks are suitable for Japanese companies, Ghosn said his own remuneration of 982 million yen ($12 million) in fiscal 2011 may be shocking to Japanese who are not familiar with the rewards that business executives command overseas.
But he said there is nothing he is ashamed of, noting that Nissan's global sales have doubled from 2.4 million units in 1999, and its operating margin has improved from below 2 percent to about 6 percent.
In fiscal 2011, Ghosn was the highest-paid director of a listed company in Japan, according to credit research company Tokyo Shoko Research Ltd.
His remuneration may exceed 1 billion yen in the current fiscal year based on Nissan’s strong business performance.
Ghosn said the auto industry faces relentless competition and corporations with a global reach need to pay salaries based on the standards of global markets.
Nissan recently head-hunted Johan de Nysschen, president of the U.S. arm of Germany’s Audi AG, as chief of its Infiniti luxury car division.
Ghosn said he would not be able to recruit the people he wants if he followed Japanese notions of fair reward, adding that compensation is only a tool to attract the right personnel.
Nissan will shortly face the task of finding a successor to Ghosn, who enters his 13th year as the company’s president this month.
Ghosn said the final decision must be made objectively in consultation with reliable board members, adding that it would be dangerous to leave it to him to pick his successor.
Referring to strong overseas sales, particularly in emerging markets, Ghosn said the key is to delegate authority to local personnel instead of transferring employees from Japan for extended periods.
He suggested that the chief executive officer of Avtovaz will remain in place even after Nissan and France’s Renault SA acquire Russia's top automaker.
Ghosn said Nissan views itself first and foremost as a Japanese company, adding that a global corporation requires deep roots.
But Ghosn cited the yen’s appreciation as a major handicap, noting that domestic operations have lost much of their competitiveness, a situation he called frustrating.
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