FSS reports financial CEOs’ pay
According to the Financial Supervisory Service yesterday, chief executives at 65 financial institutions - financial holding companies, banks, investment companies and insurance companies - received an average of 850 million won in compensation last year, including regular bonuses, while financial group chiefs earned the most. Bank presidents received 1.8 billion won in compensation annually, while the heads of investment firms got 1.6 billion won and chiefs of insurance companies received 2 billion won.
Compensation generally includes a fixed salary as well as regular and performance-based bonuses. Data showed that 40 percent of the annual wages that chiefs of financial groups and banks received was a fixed salary with the remainder being performance-based compensation. For investment firms and insurance companies, 60 percent of compensation came from a fixed salary.
The FSS study was conducted after the regulator announced in June that it would look into the wage and compensation systems of financial institutions in response to criticism that executives were receiving excessive compensation at a time of declining profits due to the bad economy and low interest rates. Local financial institutions have struggled to find new revenue streams, especially in the saturated local market.
“Based on our inspection, we discovered that the amount of compensation financial chief executives received wasn’t really performance-based,” said an official from the FSS. “For example, last year, they received relatively more compensation than they should have based on the profit their companies made. But when their profits fell, the amount of compensation didn’t go down as much.”
The official added that financial companies set their own performance-based wage systems and they tend to set their return-on-asset and earnings per share targets lower than the previous year so their chief executives are guaranteed at least 70 percent to 80 percent of what they received the previous year - even when profits fall.
“In principle, financial institutions get to voluntarily decide their own performance-based compensation system,” he said. “But we plan to continuously look into their systems so that the amount financial chiefs receive is rational.”
BY LEE EUN-JOO [firstname.lastname@example.org]