Reckitt Benckiser slashes CEO's pay by 39% after safety scandal in Korea

By Park Si-soo

Reckitt Benckiser CEO Rakesh Kapoor, one of Britain's highest-paid CEOs, had his 2016 pay slashed by 39 percent following last year’s humidifier disinfectant scandal in South Korea.

The cut was announced in the company's annual report on Friday, in which Kapoor’s total paycheck for 2016 was 14.6 million pounds ($18.2 million), down from around 23 million pounds in 2015.

The scandal was one of the biggest safety disasters here in recent years. Hundreds of infants, mothers and pregnant women died after being exposed to toxic humidifier disinfectants the company made. Many other people suffered severe lung damage. The scandal triggered a huge uproar against Reckitt Benckiser and a nationwide boycott of its products. In January, the former head of Reckitt's business in South Korea was sentenced to seven years in prison.

According to reports, another reason for the sharp cut was concerns of the company’s investors and British politicians over what they called the CEO’s “exorbitant” paycheck.

“Avoiding a public face-off (with investors) ... is probably in the best interests of the company and shareholders,” Laith Khalaf, a senior analyst at Hargreaves Lansdown, said. The company has a UK fund with 4.3 percent in Reckitt shares, according to Reuters.

Reckitt said Kapoor would receive no bonus for 2016 and the share awards for his long-term incentive plan would be halved. It said this would reduce his package by 14 million pounds from the previous year.

British Prime Minister Theresa May promised last year to overhaul corporate governance to try to close a huge wealth gap between bosses and staff.