The Korea Times

Relative total shareholder return: perfect or imperfect measure?

By Katharine Turner and Tamsin Sridhara There has been some discussion in the U.S. recently about the advantages of performance-based incentive plans that use relative total shareholder return (TSR) as the primary measure. Some clients have asked us to model how such a program might work as a replacement for a more traditional mix of equity grants with other long-term performance measures. The results of these modeling exercises can be instructive in presenting the various strengths and weaknesses of relative TSR programs for each company’s specific industry and circumstances. We wanted to share with you our experience in the U.K., where long-term incentive programs with relative TSR measures are very common. First, however, it’s important to clarify what we are talking about. The way a relative TSR measure normally works is that (a) a company identifies a suitable comparator group and performance period; (b) a total return figure is calculated for each company at the start and at the end of the period; and (c) executives are rewarded depending on the extent to which t

Nov 13, 2011By Kim Jae-kyoung

Economy

CEO pay recovers to pre-crisis level

Most companies receiving strong shareholder support for say on pay By Richard Luss, Tricia Burton and Olivia Wakefield Lee Compensation for chief executive officers at U.S.’s biggest corporations rebounded strongly in 2010 due largely to improved company performance and a rising stock market, according to a new analysis conducted by Towers Watson, a global professional services company. The analysis also found that most companies are receiving strong shareholder support for their say-on-pay proposals. The Towers Watson analysis found that the median total cash compensation, which includes base salary, as well as annual and discretionary bonus payments, increased 17 percent for CEOs in 2010. That compares with a 3 percent median increase in 2009. Total direct compensation, which includes total cash compensation plus the grant value of long-term incentives, including stock options, restricted stock and long-term performance plans, increased 9 percent in 2010. That compares with a decrease of 1 percent in 2009. Annual bonuses were a big factor in the double-digit incre

Nov 13, 2011By Kim Jae-kyoung

Economy

Take a break without laptops and smartphones

By Yang Seok-hoon The younger generation is getting better and better at juggling multiple tasks than the older generation. They can simultaneously work and play beyond the limit of physical space. So called, they freely traverse between borderless public and private spaces through various mobile platforms. The mobile revolution accelerated by iPhone brought huge and positive changes to how we work and live. Unfortunately, it is also true that this magic took away undisturbed rest from people, especially employees. For almost all of the people in Korea, it’s hard to divide work days from days-off. We carry around our laptops and smartphones, check e-mails, and face “endless” tasks anytime, anywhere. We may be slaving over a hot computer and an expensive smartphone. Would you rather have a job that pays $80,000 a year that lets you get 7.5 hours of sleep a night, or a job that pays $140,000 a year and allows you time for only 6 hours of sleep a night? According to the recent study from researchers at Cornell University and the University of Michigan, 75 percent of re

Nov 5, 2011By Kim Jae-kyoung

Economy

Generational talent management

Firms focus on newest workforce consumer, Generation Y By Deloitte Consulting Korea. Corporate brain drain, caused by an aging talent pool combined with a diminishing pipeline, is the single most concerning impediment to long-term sustainable growth in companies. To remain competitive, companies must market their brand to their newest workforce consumer ― Generation Y. While it is estimated that Generation Y ― also called Gen-Yers ― (birth years 1982-1993) currently make up less than 10 percent of the Korean labor pool, approximately 0.3 million more are expected to join this year. Targeting Generation Y As Generation Y joins the three existing workforce populations (Veterans, Baby Boomers, and Generation X), company leaders should understand their varying attitudes, beliefs, and needs and leverage such diversity. According to Deloitte Consulting LLP and the Institute of the Future, Gen-Y values can be very different from those of existing workforce generations. Gen-yers tend to look for long-term career development, variety of experiences, a sense of purpose and

Nov 5, 2011By Kim Jae-kyoung

Economy

Capitalism in paradigm shift

Anti-capitalist protests tip the balance in favor of stakeholder capitalism By Kim Jae-kyoung It takes only two years for greed to re-take the stage of the global financial sector. While both financial and emotional fallout from the 2008-2009 financial crisis has yet to disappear and is still very really amongst us, financial firms and their managers seem to have already forgot what happened for the past few years. In short, the financial world is now a contrast of misery and happiness. The global economy and financial markets remain highly volatile due to lingering uncertainties, causing many individual investors to suffer huge losses. Ironically, some business leaders, who were responsible for putting many people into hardship, are making big bucks in the process. The two faces of the American-style capitalism, in its current form, have frustrated the public and forced them to take to the street all around the world, which was initiated by “Occupy Wall Street,” anti-capitalist protests in New York. The occupation, inspired by the anti-Wall Street protests in

Nov 5, 2011By Kim Jae-kyoung

Economy

Korea heading for soft landing

By Glenn Levine The Korean economy expanded by 0.7 percent in the third quarter compared to a quarter-prior period, coming in slightly above expectations for a 0.5 percent increase. The economy grew 3.4 percent a year earlier, unchanged from the previous quarter. This confirms that Korea is growing slightly below trend. On the expenditure side, all components expanded through the third quarter. Consumer demand rose 0.6 percent compared to a quarter-earlier period; government spending rose 1.3 percent; fixed investment rose 1.3 percent, led by a 2.2 percent jump in construction; exports of goods and services rose 2 percent; and imports rose 1.8 percent. From a year ago, all components expanded except for investment, which fell 1.6 percent from a year ago. It is following a couple of week quarters earlier in the year from which it is still recovering. Consumption spending, exports and imports were all strong, rose by 2.5 percent, 9.4 percent and 6.4 percent, respectively. On the industry side, the big surprise was again in construction, which jumped 4.1 percent from a qua

Oct 30, 2011By Kim Jae-kyoung

Economy

Global firms on track for growth

Corporate M&A activity coexists with extreme market volatility By Ernst & Young Despite economic turbulence and market turmoil, four out of 10 leading international companies expect to make an acquisition in the next 12 months, shows Ernst & Young’s latest Capital Confidence Barometer bi-annual report based on a survey of more than 1,000 senior executives around the world including South Korea. Surprisingly, that marks a slight increase on six months ago, in spite of the intense market turmoil during August, when the survey was conducted. This result is predicting a new paradigm: corporate M&A activity and extreme market volatility coexisting. The fifth Capital Confidence Barometer, conducted together by the Economist Intelligence Unit (EIU), also finds that almost half of respondents are now focused on ``growth’’ in the next 12 months, with only 7 percent focusing on ``survival’’ ― the lowest number since the bi-annual report was first published in 2009. Ernst & Young’s Global Vice Chair for Transaction Advisory Services Pip McCrostie says that the world’s leading com

Oct 30, 2011By Kim Jae-kyoung

Economy

World needs a game changer

Volatility will remain high but easing of risk aversion may boost Korean stocks By Kim Jae-kyoung Over the past month, global financial markets have been heavily swayed by news and rumors surrounding the Eurozone. European leaders have been putting their heads together but the situation has been deteriorating rather than improving. On Thursday, they reached an agreement in principle to work together but failed to come up with tangible and effective solutions to contain the debt crisis, which originated from Greece but is now showing signs of spreading throughout the entire continent. With the debt fear in Europe sending a financial malaise throughout the world, market uncertainties are growing across the globe, dampening investors’ confidence. Although markets are recovering at a slow pace, it is still unclear what the future course will be. A noted global economist and investment strategist said that in order to address the fundamental problem in Europe and build confidence in markets, global leaders should find a workable solution. “The Eurozone debt crisis contin

Oct 30, 2011By Kim Jae-kyoung

Economy

Finding a Korean Steve Jobs

'Interaction Science’ seeks to create human-centered technologies By Kim Jae-kyoung On Oct. 5, Apple founder and former CEO Steve Jobs died of respiratory arrest caused by pancreatic cancer. Although he is gone, he left many things behind, such as iPods, iPads and iPhones, which have entirely changed the lifestyle of the 21st century. People talk about a lot of tangible factors that drove the success of the late IT guru. However, what made it most possible for him to create all those amazing products was his philosophy ― the way he viewed things around the world. Last March, when unveiling the iPad 2, Jobs said, “It is in Apple’s DNA that technology alone is not enough. It’s technology married with liberal arts, married with the humanities, that yields us the result that makes our hearts sing.” His comments suggest that one of the reasons Steve Jobs made Apple so special was that he understood that it wasn’t just a technology company. In other words, in order to become a champion in this complex, rapidly-changing business environment, it is essential to understand bo

Oct 23, 2011By Kim Jae-kyoung

Economy

Merit-based scheme to become norm here

By Kim Jae-kyoung Major global companies such as SC Korea are struggling in their attempts to introduce a merit-based compensation system here. They face strong opposition from labor unions, which insist the new scheme may erode employees’ benefits. One global compensation expert said that it will take time for meritocracy to be accepted by unions here but the move is a step in the right direction. “In general, we observe the trends of moving away from a seniority-based value proposition, and gradually shift toward a performance-based proposal. This change, like any other changes, will not be easy, but will eventually happen,” Diana Yang, the regional compensation practice leader in the Technology Sector of Aon Hewitt Asia Pacific, said in an interview with Business Focus. “It is true that labor unions in Korea are very strong, companies should be aware of this issue in particular. However, in the long term, employers, especially multinationals, will evaluate their investment based on productivity.” She pointed out that over-protection will make multinationals cautiou

Oct 21, 2011By Kim Jae-kyoung

Kim Jae-kyoung

Read more

Relative total shareholder return: perfect or imperfect measure?

CEO pay recovers to pre-crisis level

Take a break without laptops and smartphones

Generational talent management

Capitalism in paradigm shift

Korea heading for soft landing

Global firms on track for growth

World needs a game changer

Finding a Korean Steve Jobs

Merit-based scheme to become norm here

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