In Japan, the conduct of lower-level employees could mean a pay cut at the top.
Japan Airlines announced last Friday that its CEO, Mitsuko Tottori, is taking a temporary pay cut due to an “alcohol-related incident” involving cabin crew members — an episode the airline described as an “extremely serious management failure.”
A spokesperson for Japan Airlines told Business Insider that Tottori will receive a 30% reduction in monthly compensation for two months “to demonstrate our accountability for this incident.”
Two executives in charge of safety and cabin operations will receive 20% pay reductions for one month, the spokesperson said. All other directors and executive officers will receive 10% reductions for a month.
The spokesperson declined to specify the executives’ compensation.
The disciplinary actions came after two cabin attendants drank the day before a domestic flight, Kyodo News reported. Company policy mandates that flight attendants cannot drink beyond a certain time before a flight, the outlet reported.
One cabin crew member was fired, while another crew member was suspended, the spokesperson said.
“Through these measures, we demonstrate our uncompromising commitment to strengthening our oversight and executing fundamental organizational reform,” the spokesperson said. “We accept full accountability for the structural weaknesses that failed to prevent this incident and for the insufficiency of our previous safety measures.”
A pay dock for CEOs stemming from the actions of rank-and-file employees is not an unusual practice in Japan’s corporate culture. Curtis Milhaupt, a Stanford Law School professor with expertise on Japan’s legal system, told Business Insider that in some cases, top-level executives could be expected to resign.
“A voluntary pay cut by a senior executive as a sign of contrition for employee misconduct is a standard feature of Japanese corporate culture,” he wrote, “not a requirement stipulated in the corporate charter or bylaws.”
The country has seen other recent examples of senior executives taking salary reductions following employee misconduct.
In December 2024, Kentaro Okuda, the head of Nomura Holdings, a Japanese investment bank, apologized and took a pay cut for three months after a former employee was charged with several crimes, including attempted murder and robbery, Reuters reported. Other senior managers also took pay cuts.
Similarly, executives at MUFG Bank, Japan’s largest bank, took a three-month pay reduction in January 2025 after an employee was accused of stealing $9 million in valuables from customers’ deposit boxes, The Associated Press reported.
While these kinds of financial disciplinary actions are not uncommon in Japan, Milhaupt said the move is often more symbolic than a foolproof measure to stop corporate misconduct.
“It’s simply a way of communicating a sense of responsibility to the public,” Milhaupt said. “There is plenty of corporate misconduct in Japan, as there is everywhere. So it is doubtful that these expressions of remorse effectively deter misconduct.”
At the very least, corporate accountability in Japan comes with a pay cut and an apology.
Read the full article here
