Asia-Pacific pays executives world's highest salaries
Updated: 2013-10-18 06:10
By Michael Barris in New York (China Daily USA)
Executives in the Asia-Pacific region are earning the highest base salaries in the world, driven partly by employers in China sweetening pay packages to retain talent amid a severe management shortage, according to a survey by an executive-consultant industry group.
The base salary for senior-level executives in the Asia Pacific region during the year ended Sept 30 was $243,642 according to the recently released survey of 778 executives from around the world by the Association of Executive Search Consultants (AESC). By contrast, higher-ups in the Americas have an annual base pay of $229,261. The average base salary in the emerging markets of Europe, the Middle East and Africa was $212,066.
Within Asia Pacific, most executives made between $201,000 and $250,000, according to the survey. The majority of executives in the Americas were in the same pay range, while the highest percentage of executives in EMEA made between $151,000 and $200,000.
"Where there is a talent shortage, compensation would certainly be leveraged to attract the right talent," Joe Chappell, director of global marketing for the New York-based AESC, told China Daily in an interview.
Besides offering higher pay amid the management shortage, Chappell said rapid economic growth and inflation also could drive up compensation rates in Asia Pacific.
China is grappling with the world's worst shortage of managers, mainly owing to a dearth of professionals with Mandarin and English skills who are familiar with local and business culture and who are willing to relocate on short notice, according to the AESC. The inability of China's business-education system to turn out high-quality managers fast enough to meet demand also contributes to the management shortage, the Financial Times reported in April.
"There isn't enough talent that fits the bill locally and not enough international talent equipped with the knowledge to take on the local Chinese market," Chappell said in August. The shortage "is not expected to wane any time soon".
AESC President Peter Felix told China Daily at the time he sees the talent drought as hampering the ability of China and other developing nations to "fulfill their growth aspirations."
While the Asia-Pacific region may be offering the highest base salaries in the world, a cost of living survey in July by Mercer, a consulting unit of Marsh & McLennan Cos, found that Hong Kong had the world's highest housing costs for expatriate employees. It cost $7,091.69 a month to rent a luxury two-bedroom unfurnished apartment in Hong Kong, according to the survey – more even than the $6,500 it cost to rent a comparable apartment in Luanda, Angola's capital city, which Mercer ranked as the world's most expensive expats city.
The AESC survey looked at the base salaries of just 67 executives from Asia Pacific, compared with 274 from the Americas and 188 from EMEA. Chappell said the sample size is "relevant to portray a broad picture of executive compensation worldwide, and to compare the three broad regions of the world".
In the past, international companies offset local managerial shortages by bringing in Taiwanese and Hong Kong-born executives, hiring Chinese-born graduates returning from international universities, or sending out expatriates. But these managers can lack an instinct for local markets, the Financial Times reported. Cash-strapped global companies are also starting to balk at the cost of sending out expatriates, the newspaper said.
Meanwhile, as executives in the Asia Pacific region enjoy the world's highest average base pay rates, executive salaries in general are slipping.
AESC found that the average salary among global executives – also known as the "C suite" (for titles with "chief" in them, such as CEO, COO and CIO) – fell 8.8 percent for the year ended Sept 30. Meanwhile, middle-management salaries rose 4.6 percent during the same period.
"It is of interest to note that the C-suite appears to no longer be as differentiated from non-C-suite executive-level positions in terms of compensation," Chappell said.
Of executives surveyed who reported a rise in total compensation, the greatest percentage – 41.8 percent – reported an increase of one to five percent; 26.6 percent had a six to 10 percent increase, while 10 percent reported increases above 20 percent.
AESC CEO Peter Felix said the results highlight "the inconsistencies in perception" about executives being overpaid. "On the contrary, for most senior executives in our survey, salary increases and bonuses have only modestly begun to rise after the financial crisis," Felix said. Economic conditions pressuring revenue could attribute for the decline, among other factors, he said.
Chappell said that "while the data reveals that executives worldwide are obviously earning well above the average for every region, it at the same time paints a very different picture than the skyrocketing executive pay that we so often hear about, which is the exception rather than the rule".
The AESC survey also found the gender pay gap narrowing at the executive level. The average base salary difference between executive men and women was $22,075 in the last fiscal year.