Korea FSS reports financial CEOs’ pay; Average compensation for top 28 executives a cool $1.9 million a year

FSS reports financial CEOs’ pay

Average compensation for top 28 executives a cool $1.9 million a year

LEE EUN-JOO [angie@joongang.co.kr]

Nov 14,2013

While much attention has been given to exactly how much the heads of financial institutions are paid, a study by the country’s financial regulator shows that average annual compensation for the highest-paid 28 executives is 2.1 billion won ($1.96 million). 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.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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