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Business trends

Asia's highest paid CEOs trump US execs in pay rankings

China's pork king Wan Long took home $290m

Wan Long, chairman and chief executive officer of WH Group, the world's biggest pork company, poses with one of the company's products.   © Reuters

TOKYO -- Asia's highest paid chief executives received an average of 20% more than their U.S. counterparts in pay and incentives last year, with the region's top earner bringing home nearly three times that of America's best remunerated company boss.

Chief executive officer Wan Long, of Hong Kong listed pork producer WH Group, received total compensation of nearly $300 million in salary and stock-based rewards last year, compared with U.S. chipmaker Broadcom CEO Hock Tan, who earned $104 million in pay and shares.

Wan was just one of many CEOs at companies headquartered in Asia, outside Japan, to take home hefty packages. The 10 highest paid earned an average $60 million in total compensation, according to information disclosed in annual reports and compiled by S&P Global Market Intelligence for Nikkei Asian Review.

Separately, Pay Governance, a consultancy, found that total compensation of the top 10 highest paid CEOs in the S&P 500 averaged $49 million, based on data published in financial reports.

News of the bumper remuneration paid to Asia's top executives will fuel a growing disquiet over transparency and governance. Top management -- especially at Asia's many family-controlled companies -- "tends to receive startling amounts in remuneration and dividends that may not exactly correspond with company performance," said Yuji Kuramoto head of stewardship at Daiwa SB Investments.

The arrest of Carlos Ghosn, Nissan Motor's former chairman, for allegedly understating his income by some 9 billion yen ($79 million) over several years has also stoked controversy over hefty pay packages.

"Many [companies] implement measures to improve governance," Kuramoto said. "However, the [measures] usually turn out to be superficial, as can be seen in CEOs' involvement in decisions regarding matters like compensation or the selection of board members. Rules on how compensation is decided are unclear as well."

For example, Wan's compensation is three times Broadcom's Tan, but his company appears to be showing weaker growth, according to each corporation's financial statements.

WH Group has been the world's largest pork producer since its acquisition of U.S.-based Smithfield Foods in 2013. The acquisition allows WH Group to take advantage of stable prices and supplies in the U.S. and to sell Smithfield products in pork-loving China. But last year sales grew by just 4% on 2016, and net income by 10%. This compares with Broadcom's 33% jump in sales, while the chipmaker also transformed a $1.6 billion loss into a $1.6 billion profit.

Asia's top five highest paid CEOs in 2017 were either from Hong Kong or China. Zhang Xuan of the Yixin Group, an online automobile trading platform backed by Tencent Holdings, was the second highest earner at $113 million.

One reason Asia's corporate chieftains make so much is that their companies are feeding booming economies. Another is that as the head of family businesses, they wield considerable power over management, including remuneration terms.

Casino operator Genting Malaysia, a unit of Genting which recently sued Disney over a theme park it wants to open in the Southeast Asian nation, is family controlled. Chief Executive Lim Kok Thay was paid $19 million last year and ranked No. 8.

However, since 2017, the family has been caught up in a feud over inheritance, which has also led to bitter court battles to decide ownership of the corporate empire.

United Overseas Bank was founded in 1935 and is one of the top banks in Singapore. CEO Wee Ee Cheong is the founder's grandson. His compensation totaled $7 million in 2017 and was No. 39 on the executive pay list. Forbes put the Wee family at No. 40 in its ranking of Asia's richest clans last year, citing net worth of over $6 billion.

Canning Fok Kin-ning, No. 4 on the Asia-Pacific executive pay list, has for decades served as the right-hand man to Hong Kong tycoon Li Ka-shing. The billionaire's elder son, Victor Li Tzar-kuoi, in May inherited the chairmanships of his two flagships, CK Hutchison Holdings and CK Asset Holdings.

Fok, who kept his position as the right-hand man to the chairman, has been heavily rewarded for his long-term service as the Hong Kong-based empire's linchpin and has also earned the nickname "King of the Working Class."

His paycheck is greater than Victor Li's. Last year, Fok's total compensation from the two flagship companies was HK$210 million. His wealth has allowed him to purchase a home -- dubbed the "Palace of the Versailles of Hong Kong" -- located in the same upscale neighborhood as Li Ka-shing.

Despite his nickname, Fok has become a symbol of inequality.

According to the Hong Kong Confederation of Trade Unions, income disparity between corporate bosses and front-line workers in the city is widening, especially at CK Hutchison. Fok earns 1,462 times what a clerk at the group's ParknShop supermarket chain receives.

"That means a grassroots worker has to work 1,400 years, from the Tang Dynasty until now, to earn the amount of money that [Fok] earns in a year," said Lee Cheuk-yan, general secretary of the union and a former lawmaker.

Japan is set to require listed companies to disclose how they determine executive compensation, including details on the ratio of performance-linked pay to overall compensation as well as specific bench marks used to measure executive performance. Other Asian markets will likely come under pressure to make similar moves.

The question now is whether foreign investors will see huge pay gaps as a sign of poor governance.

According to Yukino Yamada, a senior strategist at Daiwa Securities, some companies in countries like India and mainland China are less enthusiastic about attracting foreign investors. "Shares of family-run conglomerates have less liquidity because the executive has such a high stake." These companies shunned foreign investment, she added, and the absence of this "could be a reason for their poor governance."

Many of the companies whose CEOs are on the best-paid list are in banking, entertainment and real estate.

Melco International Development operates as an investment holding company, with big casino and leisure businesses. CEO Ho Yau-lung's annual salary in 2017 was $25 million, placing him No. 5 on the Asia list.

NagaCorp, the only Cambodian company in the top 50, is the largest hotel-casino operator in the country. Founder and CEO Chen Lip Keong earned nearly $18 million in 2017, placing him at No. 10.

Bank executives are also well represented, including those from Singapore's Oversea-Chinese Banking Corp. and Australia's Macquarie Group.

CEOs in Thailand settle for relatively humble pay packages. Kasikornbank's Banthoon Lamsam was paid a little over $211,000 in 2017 and was the highest-paid at any company headquartered in Thailand, though he failed to crack the Asia top 50 list.

Nikki Asian Review chief business news correspondent Kenji Kawase contributed to this article.

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