The secret of executives’ pay

As the year-end comes, companies are busy with their employees’ performance assessment and salary negotiations. There are jokes about how to win salary negotiations. Some say, “Start focusing on your performance one month before the assessment. Nobody remembers what you did at the beginning of the year. Have you ever seen a drama aired at the beginning of the year win an award?” Others say jokingly, “Show your strong passion to your boss, saying ‘I still have 12 goals to achieve,’ quoting what the great admiral Yi Sun-shin had said.”

The annual salary of CEOs and executives are creating a buzz. Chaebol.com recently said that the average annual salary of executives of listed 93 companies of Korea’s top 10 conglomerates is 395 million won (370,000 dollars). Executives’ average salary is six times larger than employees’ 67.9 million won (63,600 dollars). The executives of Samsung Electronics are paid 520 million won (487,100 dollars), the largest amount in Korea, even after the executives who are on the corporate registry are excluded. Hyundai Motor paid 361 million won (338,100 dollars) to its executives. The Financial Supervisory Service asked Korean financial institutions to correct the salary structure of their CEOs who are paid on average one to 1.5 billion won (9.37 million dollars to 1.4 million dollars) on Thursday.

It is hard to compare with the U.S. because the 10 top paid CEOs in the U.S. received more than 100 billion won (93 million U.S. dollars) each last year. There is a growing criticism over the excessive pay in the U.S., which focuses on the importance of CEOs. Some suggested that some of the pay should be paid five years after their retirement to prevent them from focusing on short-term goals. Korea will disclose the pay of the registered executives of some 2,000 companies starting next year. People would be interested in the salary of the owner family members such as Hyundai Motor Group Chairman Chung Mong-koo and LG Group Chairman Koo Bon-moo but would be more interested in the salary of those who started at the bottom of the corporate ladder like Shin Jong-gyun, president and the head of wireless business department at Samsung Electronics.

Executives are concerned about something else. An executive of a conglomerate said, “Disclosing executives’ salary would create a headache.” He is worried more about his relatives and neighbors than regulators. He said, “If my uncle gets to know how much I am paid, he will come to me and say ‘How can you treat me like this?’” Even clan gatherings and alumni associations would contact them. Maybe that is why people say if you win a lottery, you do not tell it even to your wife.