It's good to hear the executives and employees of Shinhan Financial Group decided to return all of their stock options. But it took no small amount of public outcry and media criticism for these bankers to come up with what their spokesman described as the ``voluntary action to share pains and responsibilities of the economic crisis.''
Which brings us to the matter of whether these bank managers really deserved the hefty compensation packages in the first place. Businesses, particularly cash-short, risk-prone venture companies, usually offer stock options to reward excellent performances of their employees, on some future dates. As everybody knows, however, the banks' reckless lending without due evaluation of risks has forced the government to pour taxpayer's money into shoring up their capital base to maintain their role of credit suppliers.
Korean banks executives are the last group to be rewarded in this regard, and there are no risks to the survival of their institutions ― except probably for their moral risks ― because the government will always come to their rescue at the first signs of a credit crunch at markets.
The rewards of failure seem to be a common phenomenon in the global financial industry, but the Korean bank executives may have the best jobs in the world in that they enjoy fruits of a boom but don't share the pains of a bust, particularly because the banks have decided to freeze wages for lower-echelon employees for two years and slash 20 percent of pay for newly-hired.
It was only three months ago that bank presidents wrote letters of apology at the behest of regulatory authorities and returned their stock options. As it turns out, however, the employee stock options (ESOs) returned would have been all but scrap of paper if they'd exercised their options at the time due to rock-bottom stock prices. All this amounts to managers having replaced worthless ESOs with worthy ones while making their gestures to ``share pains."
Worse yet, some banks have recently raised the ceiling for executives' yearly pays from the present two billion won ($1.4 million) to five billion won ($3.5 billion) at a time when all sectors of the nation are groaning under a recession, with millions of unemployed people, including fresh college graduates, wander around to find jobs.
Nor are the bad effects of stock options novel news, as managers are bent on only maximizing short-term profits during their tenures without considering their companies' longer-term viability, one of the reasons for the U.S.-originated global financial fiasco.
So it's only natural that the Financial Services Commission is moving to curb the undue stock option schemes and put a ceiling on executive pay. It should also force other commercial banks to follow Shinhan's example.
It's imperative the government and the National Assembly positively consider introducing a bill strictly limiting executive pay, especially at banks receiving bailout loans or public funds, as well as retrieving most of unwarranted bonuses and special allowances as taxes, as are the cases in Germany and the United States, respectively.
Commercial banks are obviously private corporate entities but their employees need to consider why people still call them financial ``institutions'' instead of ``firms'' here. They can't be the gravy trains of greedy, irresponsible executives.