Pay disclosure forces resignations
(18 June 2010 – Japan) New regulations brought into power by the Japanese government forcing companies to reveal the annual compensation of individuals earning over ¥100 million (A$1.3 million) is expected to result in the resignation of four senior bankers at the Shinsei Bank, according to people familiar with the matter.
The executives rumoured to be resigning are chief information officer Dhananjaya Dvivedi, chief risk officer Michael Cook, head of Shinsei’s wholesale-banking operations Sanh-Ho Sohn and the chief financial officer Rahul Gupta.
Mr Gupta was responsible for deflecting pressure to merge Shinsei Bank with Aozora Bank on unfavourable terms, resulting in his recent promotion.
Mr Gupta is reportedly expected to resign as early as next week.
The person familiar with the matter told the Wall Street Journal that the compensation figures are to be made public on the 23rd of June, with the resignations becoming effective on the same day.
Regulation has only required in the past companies to expose the compensation of top level executives as a group. However, now the new regime is expected to reveal a suspected large pay division between non-Japanese executives and Japanese executives.
The resignations are inevitable due to the political climate, the person told the Wall Street Journal.
In 1998 Japan rescued the bank, making the government the second largest shareholder of Shinsei. As a result politicians are particularly sensitive about the bank.
In mid-May, Japan's banking minister Shizuka Kamei voiced his concern over what he saw as Shinsei managers' relatively high pay levels.
Since the government has injected taxpayers' money into them, it should monitor and guide them, Mr Kamei said at the time.
Mr Gupta was responsible for deflecting pressure to merge Shinsei Bank with Aozora Bank on unfavourable terms, resulting in his recent promotion.
Mr Gupta is reportedly expected to resign as early as next week.
The person familiar with the matter told the Wall Street Journal that the compensation figures are to be made public on the 23rd of June, with the resignations becoming effective on the same day.
Regulation has only required in the past companies to expose the compensation of top level executives as a group. However, now the new regime is expected to reveal a suspected large pay division between non-Japanese executives and Japanese executives.
The resignations are inevitable due to the political climate, the person told the Wall Street Journal.
In 1998 Japan rescued the bank, making the government the second largest shareholder of Shinsei. As a result politicians are particularly sensitive about the bank.
In mid-May, Japan's banking minister Shizuka Kamei voiced his concern over what he saw as Shinsei managers' relatively high pay levels.
Since the government has injected taxpayers' money into them, it should monitor and guide them, Mr Kamei said at the time.
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