“Company heroes” versus “superstars”: executive pay in Japan in comparative perspective

Abstract

In international comparison, the level and the performance sensitivity of executive pay in Japan are low. Both characteristics can be related to the prevalence of internal labor markets. These not only select the ones who will be promoted to the top, but also strongly influence the way by which the level of executive pay is determined. Last but not least, life-long company careers provide for forms of control that can function as a substitute for explicit incentives built into remuneration packages.