Top Asian local executives have clout when negotiating pay packages with new employers. Their skills and experience are in such hot demand that some multinational and high-tech companies trying to penetrate the region are willing to make offers on the spot after initial interviews.

"Asian nationals are more valuable than they've ever been," says Michael Keppler, a Hong Kong-based managing principal for the Asia-Pacific region with Towers Perrin, a global compensation consulting firm. "If you're a fast tracker, you're in a pretty good bargaining position."

If you're among these scarce commodities, you may be tempted to use your advantage to secure the largest pay package possible from a new employer. But savvy executives are taking the long-term view and leaving something on the table for their new companies when they finalize pay offers, says Tim Hoffman, a partner in Hong Kong with Spencer Stuart Inc., an international recruiting firm.

"You can force the company to give you a lot of money," says Mr. Hoffman, "but when the economy turns down, your neck will be on the chopping block, and you'll be expected to accomplish miracles."

If you aren't greedy, raises and promotions will materialize after you prove your worth, Mr. Hoffman says. When the large Hong Kong-based Asian arm of a U.S. multinational needed to hire a No. 2 finance executive, recruiters could find only one candidate suitable for the job, says Mr. Hoffman. Company officials were so eager to hire him that they made him an offer on the spot during the first meeting. The executive could have demanded a large amount of money up front but took the high road and asked for only slightly more than he was currently earning. His initial package included a HK$1.4 million base salary and a target bonus of HK$400,000. Three and a half years later, he's now the subsidiary's chief finance officer and earning HK$3 million.

When your bargaining power isn't as strong, reach an agreement on your minimum requirements up front and get it in writing. Don't expect an employer to give you a raise in a few months based on verbal promises. "Don't start a job in the hopes that six months later you'll get a raise," says Mr. Hoffman.

Cash is still king to Asian executives, but as stock options and other American-style pay programs spread to the region, compensation practices are changing. Companies in countries from Japan to India are phasing out seniority- and perquisite-based programs in favor of performance-based pay. Bonus programs are being linked to the achievement of specific goals and no longer are automatic. Stock options are being legalized and introduced. While only about 25% of companies in Asia may offer stock options now, this percentage is expected to grow significantly by 2003.  

"Everything is changing and in a state of flux right now," says Roger Marshall, a partner and managing director in Tokyo with global search firm Ray & Berndtson, who places Japanese executives with multinationals and high-tech companies. These employers usually provide performance-based incentives in their pay packages, and not every Japanese executive understands the rationale behind them, says Mr. Marshall.

"In some cases, we need to explain to candidates that the American-style bonus is different from the Japanese-style bonus and that it's based on performance and a complex formula," he says. "We tell them, 'This bonus won't be automatically guaranteed to you and you really have to perform for it.' "

Pay practices differ in various countries due to varying cost-of-living and tax rates, including the taxation of stock options; statutory retirement policies; and other issues. For example, Japan's high marginal tax rate makes leased housing and cars, which aren't taxed to the executive, more attractive. Hong Kong's 15% tax rate means nontaxable benefits are less important, but due to congestion and parking issues, Hong Kong executives often want transportation subsidies, which also aren't taxed, instead of leased cars.

"A lot of people don't want cars because there's nowhere to park them," says Peter Bennett, founder of Bennett Associates, a Hong Kong-based search firm.

While average pay is lower in less developed mainland China and Thailand, it's climbing fast due to the high demand and relative scarcity of knowledgeable local executives. Offering generous salary increases is a primary way for companies in those countries to retain valued staff.

Executives with local oversight are likely to be paid competitively for the local market, whereas regional or global executives tend to be paid competitively for those markets. Typical pay packages for local executives include an annual base salary, sometimes paid out in 14 to 18 installments, a bonus opportunity, a car or transportation allowance, annual vacation, contributions to a retirement fund and medical coverage, says Mr. Bennett.

After that, an executive pay package depends on the country and whether the employer is a U.S. or European multinational, regional or local firm. Multinationals are likely to pay executives according to pay policies in their home countries and often include stock options or other long-term incentive plan.

With these basics in mind, here's what Asian region compensation experts and executive recruiters say local managers should do when negotiating pay in their next position:

Become knowledgeable about the job and its compensation. Have a good understanding of what others are earning in similar roles at similar companies before sitting down to discuss your offer. Learn about competitive levels by researching compensation surveys conducted for the region, some of which are available on the Internet. Ask colleagues what they're earning. "Asian executives often don't have a good sense of their worth," says Mr. Keppler. "There's survey information they can tap into to understand what it is."

Think through your career goals and what you need to be earning. Have an idea of the position's responsibilities as well as your financial needs. "When we get to the point of talking numbers, you should have done your homework and know if you like the job," says Carolyn Chan, vice president in Singapore for AT Kearney, a Chicago-based global search firm. "If you are going to ask for a big price, be sure you have the data to support it."

Find out about the company's pay philosophy. Does the firm want to pay employees competitively with other companies in its industry or region, or does it want to pay at the top of the scale? The company isn't likely to offer you a salary that exceeds the range of pay it has established for that position.

Consider DHL Worldwide Express Inc., which operates in about 40 countries in the Asia-Pacific region. The company's philosophy is to provide median-level salaries and it uses surveys to ensure its pay levels stay competitive with other air-freight carriers and with consumer companies that have similar pay goals, says DHL's Singapore-based compensation and benefits manager Kees Van Doesburg. "We compete against consumer companies in the 50^th percentile of the salary range," he says. "Our competitors are in that range and we monitor that quite regularly to make sure we stay competitive."

Determine the most tax-efficient way of receiving pay. Employers in Asia are receptive to using other vehicles besides cash to pay executives in high tax brackets. In Hong Kong and Singapore, transportation allowances are common. DHL Worldwide Express, for instance, provides executives with a $1,000 monthly transportation allowance. The Hong Kong CFO who bargained wisely receives part of his pay as a housing subsidy, says Mr. Hoffman.

In Japan, where the marginal tax rate for all income and retirement taxes combined is about 60%, paying executives in tax-efficient ways is common. For example, a multinational company might lease a car or residence for an executive and provide those perquisites as part of pay, not in addition to it, says Mr. Marshall.

Some Japanese executives aren't aware of the benefits of this practice, he says. "We say, 'Look, you're asking for an extra $50,000 in pay, but do you realize that at your tax level, your net pay will only go up one-fourth of that amount?' " he says. "Rather than asking for cash, we structure the package another way so they get what looks like less of a gross number and what looks like more net in their bank accounts."

Japanese companies sometimes assist executives with mortgages and real-estate purchases, so new employers may have to help them unravel the transactions when the executives change jobs. Hiring bonuses to cover legal costs of refinancing real estate are common. This was the case with the new president and representative director of a wholly owned subsidiary of a U.S. software company in Japan. The executive received a hiring bonus and extra time to extricate himself from a series of real-estate investments with his previous employer. Additionally, his total package of about $500,000 included a company car leased for his use, a performance-based bonus and a significant number of stock options, says Mr. Marshall.

Consider split payments. An Asian regional manager who has 20% of his responsibility in his home country and 80% in one or more other countries may be able to request a contract to be paid separately for his work in the other countries. The company would then assess taxes at the home-country tax rate only on the portion of the salary paid in the home country.

"If you're legitimately working in another country as a region manager, you might have good reason to have part of your pay allocated in other countries," says Gary Parker, senior vice president at Aon Consulting Group International in New York. Be careful when you apply this strategy, though. "You don't want it paid in Japan where the tax rate is over 60%," says Mr. Parker.

Likewise, managers in some countries request some of their salary be paid offshore in more widely accepted currencies. Don't try to hide the funds, though; you must report your pay for tax purposes. However, a mainland China executive, "who gets paid in yuan renminbi, which isn't a very marketable currency outside of the People's Republic of China, might want to ask for part of his pay in dollars," says Mr. Parker. "There isn't any prohibition on doing that as long as it's reported."

Know how the performance-based bonus program works and if its terms are negotiable. Generally speaking, companies are more likely to be flexible with bonus programs than with salaries. They may agree to a greater target bonus or to increase the payouts -- a term called acceleration -- after you achieve your target goals. To negotiate effectively, understand the goals and objectives you must meet to earn the target amount. Also know if your plan is "capped" so your bonus payout ceases after a certain level of achievement.

Typically, bonuses for middle managers in Asia seldom exceed 18% of pay, while incentives for top managers range from 15% to 30% of pay, says Mr. Parker. There are two components to DHL's performance-based bonus -- 4.8% is based on company profit targets and 19.2% is based on the executive reaching individual objectives, says Mr. Van Doesburg. "If they have a high level of individual performance, they can make more money," he says.

With an accelerator, the bonus payout increases after you achieve all your goals. For instance, if you achieve 100% of your goal, you would get 100% of your target bonus. But if you reach 115% of your goal, you might receive 130% of your target payout. "I always tell executives that if you have a highly leveraged performance element, ensure that you understand what the criteria to earn it are and your target," says Mr. Marshall. "Every year, when the budget is put together, you should be directly and deeply involved in the process so that you know what you have to do and minimize the chance of having an unreasonable target put in place that can't be realized."

The Japanese software company executive who received a hiring bonus to help with his real-estate investments has an accelerator in his bonus plan, says Mr. Marshall. After he achieves his target goal and receives the target bonus, a new calculation kicks in. If he reaches 110% of his performance goals, he receives 130% of his target bonus, and so forth.

Ask for a guaranteed bonus for the first six months to a year. If you're setting up an office, heading up a sales organization that isn't doing well or overseeing a long sales cycle, achieving your revenue goals in the first year will be difficult.

"It's unreasonable to expect you can turn around the organization, so chances are the company will protect you and say it will give you all or part of your bonus the first year," says Mr. Hoffman. "Of course, the second year, you live and die by your results."

Get an employment agreement. In many countries, severance pay isn't legislated, so executives who are dismissed might not receive any compensation during their unemployment. Ask to receive the entire job offer in writing, including the terms and conditions of the job and the amount of severance you'll receive if you're terminated. "If an executive is entrusted in running a significant piece of the business, they should have an agreement that protects them so they don't get fired in two years," says Mr. Parker.