Hana Financial Issues Stock Options to Top Managers
By Lee Hyo-sik
Staff Reporter
Hana Financial Group has decided to issue stock options to Chairman Kim Seung-yu and 200 other top executives, giving them rights to purchase a total of 1.65 million group shares at a lower than market price.
In a public notice for shareholders' meeting Thursday, Hana Financial said it will grant group chairman Kim 80,000 shares of stock options. Hana Bank president Kim Jong-yeol, Hana Daetoo Securities CEO Kim Ji-wan, and vice chairmen of group business units will be entitled to 70,000 shares each in stock options.
Also, Hana Investment Banking & Securities CEO Lee Chan-keun and other CEOs of smaller group affiliates will be awarded 20,000 shares each. But Hana Financial decided to remove stock options for outside directors and auditors.
In 2007, Hana granted a total of 1.82 million shares of stock options to its 246 top group executives, including auditors and outside directors.
The stock option price at which Hana executives purchase shares will be decided at the upcoming shareholders' meeting on March 28. Stock option holders will be required to hold shares for the next two years and then be able to exercise stock options within the following three years.
Stock options are regarded as an effective compensational tool to encourage corporate managers to do their jobs better as they can realize huge capital gains if share prices go up. But civic groups and regulators are complaining about them, citing the widening compensation gap between managers and regular employees.
Recently, major banks have begun considering abolishing or cutting stock options for some board members, instead they've introduced new performance evaluation systems, reflecting calls for improvement from regulators. The government has urged lenders to refrain from issuing stock options to their executives amid mounting public criticism that an increasing number of firms are abusing the system for the benefit of top managers.
The country's largest retail lender Kookmin Bank has removed stock options for its top managers and adopted an alternative system to better evaluate managerial performance.
Other banks, including Shinhan Financial Group, have abolished stock options for outside directors and auditors. But talks are still ongoing about whether to scrap stock options for presidents and other managers altogether.