Deferred payments boosted total compensation for the top managers at Nomura Holdings Inc., Japan’s largest brokerage, by 79 percent last year even as the company eliminated their cash bonuses.
Chief Executive Officer Kenichi Watanabe and his team received average compensation of 160.8 million yen ($2.1 million), including deferred remuneration, for the year ended March, up from 89.9 million yen a year earlier, according to a report to shareholders posted on the Tokyo-based firm’s website.
Watanabe and Chief Operating Officer Takumi Shibata oversaw a 60 percent decline in net income to 11.6 billion yen for the year. The shares touched the cheapest in at least 37 years in November and Moody’s Investors Service cut the firm’s credit rating to the lowest investment grade during the period.
“This shows Nomura is still seeking to become a world-class player and it’s giving the higher salary in anticipation of future business, including merger advisory,” said Katsunobu Komizo, president at Executive Search Partners Co., Japan’s biggest recruitment firm focusing on banks. “Stakeholders may complain at the general meeting. Still, the compensation is low compared with global competitors.”
Nomura paid a total of 965 million yen to Watanabe and five other executives for the fiscal year, the report shows, without providing individuals’ remuneration. The previous year, it paid 10 top managers a total of 899 million yen.
Basic Pay ‘Flat’
The main reason for the increase was the payment of 587 million yen of deferred compensation that was awarded through to the year ended March 2011, the company said in an e-mailed statement. “Basic compensation per head remained flat and no cash bonuses were awarded” last fiscal year, it said.
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., the biggest U.S. bank by assets, was awarded $23 million in salary and bonuses last year, almost double that of the six Nomura executives combined. Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein was paid $12.4 million, about the same as the total for the Nomura officials.
Nomura distributed the figures ahead of a general shareholders meeting scheduled for June 27. The bank pledged last fiscal year to cut $1.2 billion of expenses that swelled after it bought bankrupt Lehman Brothers Holdings Inc.’s Asian and European operations in 2008.
While profit fell last fiscal year, it grew in each of the past two quarters. Net income rose 86 percent in the three months ended March from a year earlier to 22.1 billion yen as gains from trading outweighed declines in investment banking.
Nomura, which was the top financial adviser for Japanese mergers and acquisitions in 2011, remains in first place this year after working on 54 deals, including the government’s purchase of a stake in Tokyo Electric Power Co., data compiled by Bloomberg show.
Shares of Nomura have fallen 42 percent since the start of last fiscal year. They dropped 2.7 percent to 252 yen at the close of trading in Tokyo today.
Moody’s cut Nomura’s debt rating to Baa3, the lowest investment grade, on March 15, saying global competition raises questions over its profitability.