

Japan Airlines' CEO pays himself less than the pilots, takes the bus to work - petsos
http://www.cbsnews.com/stories/2009/01/28/eveningnews/main4761136.shtml

======
WorkingDead
They canceled the common share in December and gave the company away to the
top executives in a private stock offering. These are not the benevolent
capitalists you are looking for.

<http://www.jal.co.jp/en/other/info2010_0831.html>
[http://www.reuters.com/article/2010/12/27/jal-
idUSSGE6BQ08C2...](http://www.reuters.com/article/2010/12/27/jal-
idUSSGE6BQ08C20101227)

------
_delirium
Has anyone written a good book on Japanese corporate/management/business
culture? I hear a lot of tidbits about it, both good and bad, mentioned in
recurring news articles like this one. They're intriguing enough that I'd like
to read something deeper and well-researched, but I can't seem to find
anything that looks like a good overview book.

The only books I can find seem to either be of the "teach Westerners how to do
business in Japan" variety (not my interest), or very specialist academic
books and paper anthologies on narrow aspects.

~~~
jakarta
I don't think you should take much stock in Japanese business culture. While
there are some great aspects 'toyota way'/continuous improvement...

There's also a lot of drawbacks. The management by consensus, hammering the
nail that sticks out, the lack of willingness to deal with real problems,
putting cultural norms before economic logic -- these are all major issues
with Japan that are partly responsible for why they have been stuck in an
economic malaise for the last 20 years.

------
bmelton
I expected to read this as another '$1 a year salary' story, wherein the CEO
was still _actually_ rich, but only brought in a meager 'salary', owing the
rest to dividends.

What I got instead was a story about what seems to be a brilliant boss. He
lowered his own salary along with everybody else's. He's accessible. He
actually rides his planes and lets people know he's the CEO of the airline.

In short, he is accessible to both his customers and employees. In the startup
world this probably isn't that uncommon -- when you have a staff of four or
twenty, accessibility is easy to get. Wikipedia lists Japan Air as having over
30,000 employees.

This is impressive to me, however, it's worth pointing out that despite this
practicality and accessibility, the article linked was written in 2009, and
Japan Air filed for Chapter 11 bankruptcy last year.

~~~
patio11
_I expected to read this as another '$1 a year salary' story, wherein the CEO
was still _actually_ rich, but only brought in a meager 'salary', owing the
rest to dividends._

Without reference to this particular CEO, since I don't know him from Adam,
much has been made of Japanese CEOs being compensated modestly and it is
mostly an accounting fiction. For example, the CEO at a particular Japanese
company might not be able to afford a dhh-style automobile, but if he desires
to drive one, one will be made available for him from the corporate fleet. He
lives, like many of his employees, in company housing, but his company-
provided housing is decidedly _not_ in the dorms with the 22 year old
trainees. He will, like many of his employees, spend the majority of his meals
working officially or unofficially on company business, and most of these will
end up on the expense account of either his firm or one of his business
partners'. etc, etc

Compare it to being President: you may be cash-poor by the standards of the
rich, but that is not a meaningful barrier to desired consumption.

Speaking of which: I recently filed my taxes in Japan. The Japanese equivalent
of the Schedule C (small business tax return form) has, like the Schedule C,
an entry for meals & entertainment. Mine read 0 yen. A helpful person informed
me that that was anomalously low, and that, wink wink, the routine practice is
to claim that the company paid for every meal because, wink wink, we all know
how being a salaryman works.

~~~
zach
So the difference is merely in career security, I guess.

Now I understand why CEO pay got so high so quickly: corporate job security
plumneting. It corresponded with the rise of CEOs bouncing from one company to
another and being executives for hire.

If you know you're set for life as an executive of a company, who needs a huge
amount of personal wealth? But if you could be cut loose from your comfortable
SVP gig due to circumstances beyond your control, you have a much greater need
to be personally really comfortable. The company's not going to pay your
country club dues for the rest of your life, after all.

I can't believe I didn't understand this before, but then I suppose I don't
think about the realities of being a senior executive at a huge company.

The unfortunate part about this is that replacing cultural security with
individual economic security almost always introduces inefficiencies. In this
case, giving big company execs the incentives of a founder or entrepreneur
doesn't give them the attitude of one.

~~~
ohashi
A good place to look is professional athletes where careers are very short on
average and the amount of money they earn seems absurd. I think in football I
heard something like average pro career being 6 months. It's no wonder the
contracts are frontloaded/bonus based. In a sport like hockey where salary is
guaranteed no matter what, you don't see the same bonus but frontloading
occurs on really long contracts to circumvent salary caps. Back to CEOs, it
just looks like rational behavior given average job length and amount of money
needed to maintain a lifestyle.

------
valjavec
Keep in mind that JAL is under chapter 11 bankruptcy, so it's not like JAL is
full of cash.

I like his attitude more than those bank executives that got bailed out and
paid themselves multi millions at the same time.

~~~
mgkimsal
but of course, you have to understand - they _have_ to pay those guys
millions, because how else would they attract the top talent? you know, that
talent that led to untold numbers of wealth being systematically destroyed?
You don't just find talent like that working for, say, $500k. You gotta pay
_millions_ to get talent that capable.

~~~
bane
yeah, because they'd go work for the _other_ investors who are making money
hand over fist...you know...the _other_ Wall Street...because there are so
many and their skill set and salary requirements translates so well to other
industries.

~~~
true_religion
You have to pay millions because other people on Wall Street are paying
millions thus the best talent goes there.

What you're implying is that we should have top-down wage controls (i.e. a
command economy) or bottom-up wage controls (i.e. collusion). The first is an
idea which is seductive, but historically a failure. The second is illegal
under our current rules and should remain illegal lest you want every
department store to collude to pay their workers minimum wage + 1 cent.

~~~
bane
I'd argue that if the government (us) hadn't bailed everybody out, the firms
would fail and then they'd make $0. If a small firm could afford to pull in
some of the unemployed traders, more power to them, but then it's an
employer's economy and the salaries (and bonuses) would be more reasonable.
The market would more or less work itself out (though it could be painful in
the short term).

------
mbateman
While a lot of what he does is admirable, I find it reprehensible that he pays
himself so little (assuming he's not compensated in some other way). Either he
is actually worth that little, or he's pretending to be worth less to make
people feel better.

If it's the former, the airline should hire a new CEO.

If it's the latter, it's a petty pretense aimed at petty people. And a self-
respecting "ordinary" person who has a sense of the value of her time would
consider it a slap in her face if her boss doesn't see fit to apply the same
sorts of standards to his time.

~~~
dpapathanasiou
He's also going against a basic economic motivator:

" _The ugly truth is that your boss is probably overpaid--and it's for your
benefit, not his. Why? It might be because he isn't being paid for the work he
does but, rather, to inspire you. In other words, we work our socks off in
underpaying jobs in the hope that one day we'll win the rat race and become
overpaid fat cats ourselves. Economists call this 'tournament theory.'_ "

[http://www.forbes.com/2006/05/20/executive-compensation-
tour...](http://www.forbes.com/2006/05/20/executive-compensation-
tournament_cx_th_06work_0523pay.html)

~~~
Nobido
I've heard this theory again and again and as someone who works in a (non-
tech) industry where it is the norm for people at the bottom to work very hard
for very little,while the bosses travel the world and live in huge beautiful
homes, this does NOT seem to be the case in reality. Myself and my colleagues
find it hard not to become bitter about it and to stay motivated to work hard.
I only graduated 6 months ago but about half of my class has already become so
discouraged by this system that they are thinking about - or already have-
switched careers.

On the other hand, in my previous job the boss paid us As much as he could
afford to ($17/hr, not bad for retail) and in his life was by no means rich at
all. He drives a beat up car and wears second hand clothing. We all respected
him so much and felt much more motivated to do well, and also felt like we
were an actual part of his company and took it personally how well the company
was doing. In my position now, and my colleagues agree, we feel totally cut
off from the company and have no interest in how well a collection does (I
work in fashion.)

Basically I feel like this theory only works if the CEO is overpaid and the
workers are fairly paid. But in the end I think feeling part of a team is
better for the company than feeling like you are in a tournament.

I would also like to add that 90k is hardly embarrassingly low. That is quite
a comfortable wage that many people will never see in their life.

~~~
dpapathanasiou
You're right, it only works if you believe in the possibility, i.e., you see
your peers get promoted to those positions or start their own lines, etc.

A tech startup analogy is: a company issues an IPO or gets acquired.

You know it's a fairly rare event, and it may not happen to you, but you
believe it's possible, so you're motivated to keep going.

~~~
reinhardt
An important factor is how much you feel in control of your fate (whether the
control is real or imaginary is less important). Tech startups feel it's much
more up to their skills and creativity to make it than a lowly employee
working for the Man in a big bureaucratic multinational, even if statistically
they have about the same chance. It's similar to why most people are more
afraid of flying than driving, even though the former is much safer
statistically.

------
sunchild
JAL is my favorite airline. If I can, I always fly JAL. Sounds like bad ad
copy, bu† it's true.

------
aboyeji
Not to be negative but he might be doing it to avoid income taxes. So many
silicon valley CEO's do that. The real questions are what is compensation +
stock options. The article does not provide that information.

Nonetheless, its a good idea to appreciate people's value with good pay.

When you accept money in payment for your effort, you do so only on the
conviction that you will exchange it for the product of the effort of others.
\- Francisco D'Acconia

------
njharman
But how many times did he get a taxpayer funded bailout / corporate wellfare?
The real value of the american CEOs isnt that the run profitable business,
it's that they get other peope to pay for their fuck ups.

------
Bjoern
Didn't Nishimatsu (JAL CEO) resign from his post?

------
maxxxxx
In the US he would get a boatload of money as retention bonus to stay on.

------
lwhi
Cynically, I reckon this kind of behaviour is about manipulating morale, tax
and dividends. I applaud his actions - but I'd be very surprised if he
wouldn't have benefited from any increase in company profitability.

------
dev_jim
There's no nobility in poverty anymore.

