Ex-bosses paid despite scandalKB Financial Group will pay stock option incentives worth millions to three former executives who left the company dishonorably.
According to the financial industry on Monday, a sub-committee of the group’s board agreed to grant
payments to three executives whose incentives were on hold because of previous penalties by financial
The three are Lim Young-rok and Euh Yun-dae, former group chairmen and Lee Kun-ho, former bank CEO.
The group decided to grant them stock options based on their term in office.
Although the group does not reveal the amount of the incentives, the market estimates that Lim would take around 20,000 shares of the group, worth nearly 670 million won ($573,237). KB Financial Group shares closed at 33,450 won on Monday.
Lee will take 50 percent of the total yearly incentives and Euh is estimated to get 1.5 billon won to 2 billion won, according to the market.
It is up to each financial group to compensate former executives or not, however some in the financial market feel it is morally incorrect to recompense people who were forced to retire dishonorably after doing financial harm to the institution.
Lee and Lim were punished by the Financial Supervisory Service (FSS) in 2014 following an internal dispute over changing the bank’s main computer network. Lee requested an investigation by the FSS, alleging Lim intervened in the bank board’s decision making process.
The FSS, which has direct oversight power on banks, punished Lee with a reprimand that bars him from landing a job in the financial industry for three to five years. It recommended the same reprimand for Lim to the Financial Services Commission (FSC).
The FSC, however, raised the level of punishment and ordered a three-month suspension on Lim as well as the reprimand, accusing him of aggravating the boardroom feud.
Lee decided to step down immediately, while Lim was dismissed by the group and filed a lawsuit against the FSC, which he eventually retracted.
Lim will not be able to receive incentives for the 14 months he served as chairman because of the punishment. But the group’s sub-committee decided to pay him incentives for three years between July 2010 and July 2013, when he was the CEO of the financial holding company.
“For the time he served as the CEO, there was no grave reason for cancelling the incentives,” said a KB Group spokesman. “The decision was reviewed by outside legal experts.”
Euh was issued a warning by the authorities for ordering a leak of confidential information of the group to mislead foreign shareholders in the process of appointing three outside directors in 2013.
Euh was suspected of ordering one of his close aides, Park Dong-chang, then-vice president of the group, to meet with analysts of U.S.-based Institutional Shareholder Services (ISS), a subsidiary of Morgan Stanley, to write a report advising foreign investors to reject the appointment of three outside directors for the KB group, saying they had caused chaos among the group’s leadership by opposing a plan to purchase ING Life Insurance in 2012.
Foreign investors hold nearly 70 percent of the financial group, which is worth 461.4 trillion won as of March.
“The board, however, decided to pay the former chairman since he was only given a light warning, while Park was penalized but won an administrative litigation case against the punishment,” the spokesman said.
BY SONG SU-HYUN [email@example.com]