Samsung Electronics mobile division CEO Shin Jong-kyun received the biggest paycheck last year among chief executive officers and owners of major conglomerates. Shin, a professional executive, received 14.5 billion won, up 134 percent from 6.2 billion won in 2013.
Hyundai Automotive Group Chairman Chung Mong-koo ranked second with 10.7 billion won. But his actual pay rises to 21.6 billion won if 10 billion won he received from Hyundai Steel as severance pay is included.
The statistics were disclosed by the Financial Supervisory Service Tuesday under a revised capital market law that obliges major companies to reveal the salaries of corporate executives who earn more than 500 million won a year. This is the second time the salaries of high paid executives have been disclosed.
The financial regulator said the number of CEOs who earn 10 billion won a year fell from six in 2013 to two in 2014. Given this, it looks as if CEOs received smaller pay last year because of the protracted business downturn. But the truth is that CEOs who are family members of chaebol or large conglomerate owners relinquished their registered executive posts to avoid disclosing their salaries.
The revised capital market law allows unregistered executives to be exempt from the obligatory disclosure of salaries although they exercise managerial rights. That’s why Chey Tae-won of SK Group and Kim Seung-yeon of Hanwha Group, last year’s two top-earning tycoons, missed this year’s list of top earners. The two second-generation chaebol chairmen resigned as registered executives last year after being convicted of financial crimes.
Some highly paid owners also have forsaken their registered executive posts even without giving a clear reason. Some third-generation managers, including Samsung Electronics Vice Chairman Lee Jae-yong, have long been unregistered members on the company’s board of directors.
Disclosing CEOs’ salaries has already become a global trend. The United States requires major companies to disclose the pay of its top three earners whether they are registered or not. Most other industrialized countries also make it mandatory for businesses to make executives’ pay public.
It’s not difficult to understand why top managers should disclose their salaries. It’s an attempt to enhance transparency in management by ensuring that their annual salaries are determined according to corporate results and their contribution to companies. It’s also possible to prevent executives from raising their pay arbitrarily in secret behind closed doors.
Given that few can still be confident of our corporate transparency, it’s shameful that tycoons, who take control of companies, are omitted from the pay disclosure list, capitalizing on the legal loophole.
The authorities should streamline the rules so that chaebol owners and their families will be obliged to disclose their salaries without fail.