[VIEWPOINT]Pay Korea's CEOs more money
Published: 06 Jan. 2003, 00:49
The world has been watching Korea's economic development and a number of people have been amazed at what we have accomplished over the last 40 years. Nobody, however, seems to be impressed with Korean chief executives. This is mainly because Korea's business environment has prevented global chief executives from emerging here.
Star chief executives, such as Jack Welch and Bill Gates, may never spring from this country's soil unless all prejudices against people who are in full charge of companies cease.
The development of a genuine capitalistic system depends on competition. A businessman must work hard to survive the competition and the accomplishment should be rewarded fully. CEOs, in this sense, should work on effective management strategies and represent the interests of stockholders.
But they should also establish overall management goals, such as optimal sales, profits and market share. He or she should be rewarded with money after fulfilling these goals, otherwise the executives might pursue other opportunities.
A company's fate depends on the ability of its CEO. Koreans have been watching the sharp contrasts in company performance in the wake of the financial crisis. There have been companies with good performance, which could be attributed to their brilliant and wise chief executives. On the other hand there are companies led by chief executives/owners whose incompetence has driven the firms into bankruptcy.
After successfully getting through the International Monetary Fund's bailout, Korea is in need of bright CEOs with global minds. Sports without star players do not attract a large number of spectators; companies with no star chief executives might not be competitive enough to support the economy of their country.
Stars are found not only in show business and sports. A heroic star chief executive can raise his company's value, and employees in the company might see themselves in the future through the success of the top manager.
Let's look back and face reality. Korean CEOs on average are paid six times as much as workers just out of college. Some people say chief executives are getting way too much money, but it is far from the truth.
Considering accumulative tax, top executives get 4.5 times as much money as new employees. If a newly hired worker paid 20 million won ($16,500) annually is expected to assume the heavy responsibilities of a CEO at the end of 30 years but can look forward to being paid 120 million won as head of the concern following all those years of hard work, he will not be motivated to do his best for the firm.
Famous chief executives in the United States are paid 430 times as much as new workers just out of university. A leading local electronics company pays each of its five executives more than 3.5 billion won in annual salary, which explains why the company is one of the best known firms in the world. Meanwhile, a CEO at a state-run company earns 120 million won a year, even though the firm is ranked as one of the top 10 in the industry.
Koreans need executives who can be role models for college graduates who are about to begin their careers. Those who do not have goals and targets do not have a future, and those who do not have motivation will have no lifetime achievement. Substantial rewards should be given to top executives of companies so that the true meaning of a star CEO can become known in this country.
CEOs with economic ability should be regarded as heroes, just like Mr. Park and Ms. Pak. Then Korean firms will be able to join the list of global firms and so will our economy.
* The writer is the chairman of the Korea Chamber of Commerce and Industry and vice-chairman of International Chamber of Commerce.
by Park Yong-sung
with the Korea JoongAng Daily
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