Nomura's top 10 executives earn an average of 674k each. How can it pay its investment bankers more?

In today's investor presentation Nomura lays out its plans for the European business: it wants to elevate M&A and ECM to the "next level."

To do so, it will probably need to hire some new senior M&A and ECM bankers. And senior rainmakers don't come cheaply: 500k or more, is the norm.

But how can Nomura justify paying senior investment bankers enormous packages when it's paying its 10 most senior executives globally an average of just $1.1m (674k) each. As Bloomberg points out, this includes everything: their stock, their bonuses, their salaries.

By comparison, over at Goldman Sachs Lloyd Blankfein alone earned $19m in 2010.

How does Nomura get away with it?

The simple answer is that Nomura's top people are in Tokyo and that in Tokyo banking is a far less lucrative profession than in London or New York. Daiwa's similarly restrained: it paid its top 14 executives an average of 290k in the year to March 31st.

Do Tokyo-based senior executives flinch when they're asked to sign-off pay packets for international investment banking subordinates that far exceed their own? And does lower pay at the top of the organisation leading to lower compensation all the way down?

Historically, yes: Japanese banks were notorious for paying parsimoniously. More recently, however, Nomura's been more generous. Although there have been gripes about its recent bonuses in equity research headhunters say Nomura seems to have generally paid ok in areas like fixed income.

It probably helps that Nomura's investment bank did exceptionally well in the first quarter.

But if the investment bank stops performing, Nomura's poorly paid executives in Tokyo are will surely be quicker to curtail the extravagant investment bankers earning many multiples of their own compensation. Overpaid underlings are just about tolerable when they're making you money and completely intolerable when they're not.