Hacker News Reader

Comment by bmelton | Hacker News Reader

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.

View on HN

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.

I don't get the sense of that, though it may well be the case. Specifically, as they referenced that he takes the bus to work, wears suits off the rack, etc.

Honestly though, I'm MUCH more impressed with the accessibility -- knocked down the walls of his office, eats lunch in the regular cafeteria, etc. I know very little of Japanese culture, but he at least gives the impression that it's sincere, and as I mentioned, my initial expectation was quite cynical.

Offtopic (bearing in mind my Japan-ignorance), having an excess of meals and entertainment on your business tax returns is an invitation to be audited here in the states. You might want to speak with someone who can give you legal advice without winking. ;-)

I totally understand the bit about it being an audit flag in the US. In Japan, it is apparently considered routine practice, in the same fashion that the IRS would never question a business deduction for a subscription to the Wall Street Journal. (I edited out the identity of the person giving the helpful suggestion shortly after posting. Suffice it to say she speaks from a position of authority on the matter.)

Isn't it different than here where a CEO gets a golden parachute even when they drive the company into the ground? Here the CEO doesn't have to remain at the company to have the perks.

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.

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.

It's my understanding that the status of being CEO of such a large company also has enormous non-monetary rewards in Japan.

There are other professions that bring more status than CEO in Japan.. one of the former Toyota heads emphasized his status as a professor in a renowned university over his being a top executive.

I imagine most would. Even here (US), "professor of _ at Harvard" sounds more respectable than "top executive," including "top executive of Toyota" in certain circles (like to most of the public).

One commands respect, while the other sounds powerful and possibly evokes stereotypes of evil, rich guys.

I mean, there's no hiding it if you're a top executive at a big company, but putting the other title first gives off a certain impression to most normal folk. No?

Regardless of whether or not life's necessities are provided for the CEO(s) outside of their salary, the fact that he is taking a relatively massive, honorable paycut remains... which frees up a hefty sum of money every year, allowing workers to keep their jobs and support their families. Even if it's a small handful of workers or just one... it is a very honorable thing to do and should not be cheapened in any way. I wish every other CEO or person in a position of power/wealth would follow suit.

This story reminds me of an experience I had on a Virgin Atlantic flight between London and LA in 1999. I was flying economy class and was one of the few passengers on the flight who was awake at 4am.

Richard Branson, the owner of Virgin, walked up from the front of the plane and surprised me by asking if he could sit in the empty seat next to me and chat for a few minutes about my experience with Virgin Atlantic and how it could be improved.

I got the impression that he was genuinely interested in listening to my feedback and that he cared passionately about his airline. It made a huge impression on me and set the standard by which I have judged senior executives ever since.

Branson encourages people to write his head office with feedback.

Back in 2002 I sent them a letter because I was frustrated with the kiosks at the Virgin Mega Stores and suggested some improvements (you'd scan the barcode on a CD and it'd pull up a 30-second samples of songs on the album that you could listen to. Good idea in concept, but the implementation was horrible.)

I got a letter back several weeks later saying my feedback had been passed on to the appropriate parties and they'd get in touch.

A couple weeks later I got a phone call (!) from the VP of Product of the Virgin Mega Stores thanking me for my feedback and explaining that he knew the kiosks were sub-par, but their hands were tied by licensing arrangements.

I can't begin to explain how impressed I was that

a) Branson's address was on the Virgin website,

b) his office responded by mail to my letter,

c) they passed on my feedback to the relevant party, and

d) the relevant person himself called me to explain the situation and thank me for caring enough to write

I was pretty damn impressed by the experience, and Virgin has been a great example of a company that focuses on great products, and customer and employee happiness as I build my company.

fwiw, which very well may be nothing, it's funny that virgin came up as the second example, since you'd be damned to find one of those kiosks anywhere in the US now.

    Japan Air filed for Chapter 11 bankruptcy last year.

A Japanese Airline filed for bankruptcy under the bankruptcy laws of the United States?

In Japan I believe it is called "Corporate Rehabilitation", but it is very similar to U.S.'s chapter 11 status.

I see your point and I agree with you. Look over the article describing the bankruptcy announcement, it states that "Some 15,600 jobs are expected to be cut."

That is quite damaging for a company of such degree and the family of all those employees.

I think the lesson here is that it's important to be close to your employees, regardless of how rich you _can_ be.

Actually, I think the message is that it's more important to be competent than nice. Most of those laid off would have probably preferred an overpaid, aloof manager who kept the company afloat.

Not saying you have to choose, of course. But being competent at management doesn't require you to be loved by all your employees.

This seems to be a classic example of correlation vs. causation.

Airlines have been having a rough time in recent years. Against a background of people bashing them on environmental grounds and promoting alternative modes of transport, often hypocritically, they have seen major costs such as fuel going way up, their market suffering because a lot of air travel is a luxury that people aren't so willing to pay for in a depressed economy, and in many cases significant staffing problems due partly to the same economic conditions.

We can't say whether Japan Air failed because of its CEO's apparently folksy style of management. For all we know, it would have gone to the wall two years earlier if he'd been claiming millions and not so aware of what was really happening from his customers' and staff's points of view.

I didn't say anything like that. In fact, I'm arguing the same point: we can't say his folksy style had any effect on the bottom line, good or bad. I'm just saying that it's clearly not required for good management.

I'd say that's pretty dependent upon one's definition of "good management". Not running the company in the ground is merely acceptable. Looting the company and distancing yourself from the people that sustain your lofty position while not running the company in the ground still seems pretty crap to me compared to engaging your employees directly and keeping your consumption (read salary) in line with the rest of the company while not running said company in the ground. YMMV

Reply on news.ycombinator.com