Kaplan (1994) concludes that the relationship between top pay and stock performance in Japan is similar to that in the USA. Using a new and comprehensive data set that includes presidents' stock and their stock option holdings, this study estimates the sensitivity of Japanese presidents' wealth to shareholder wealth in the period 1977-2000. Contrary to the commonly held belief that Japanese corporate governance is becoming more like that in the USA, the results show that pay-performance sensitivity actually decreased substantially after 1990. In 2000, Japanese presidents received $US22,100 when stock returns increased from -2.1% to 14.8%.
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