A convicted criminal was among the highest-paid South Korean corporate directors last year for the second year in a row.
Kim Seung-youn formally stepped down from Hanwha Group in 2014, after a new conviction and suspended sentence over fraud that cost group companies hundreds of millions of dollars, but the departing chairman still received a pay packet worth $16m.
The payout was revealed on Tuesday when South Korean listed companies published annual pay details for their registered directors for only the second time, in accordance with a law that came into force last year.
The payment to the former chairman made him the second-best paid of those whose remuneration was disclosed, and it comes amid investor concerns about checks on the power of the founding families who still control most of South Korea’s biggest companies.
The top earner of 2013 was Chey Tae-won, then chairman of SK Group, who was awarded bonuses of Won20.7bn on top of a Won9.4bn salary — despite spending almost the whole year in prison for stealing Won45bn from companies in the group. He has since resigned from his official positions.
In 2014, the top earner was Chung Mong-koo, chairman of Hyundai Motor Group, who took home Won21.5bn ($19.4m) from the three companies where he is registered as a director. This included a Won9.5bn farewell payment from Hyundai Steel, after he resigned as a director early in 2014.
South Korean executive pay appears relatively modest compared with that in the US, and companies tend to eschew generous stock incentives.
But some corporate governance experts are sceptical of the public pay tables because some controlling family members are not covered by the disclosure requirements.
Many controlling shareholders at South Korean chaebol groups are not registered directors, said Lee Won-il, founder of Zebra Investment Management, an activist hedge fund. “They try not to be, if they want to get big compensation.”
Lee Kun-hee, the chairman of Samsung Electronics, is not registered as a director. Samsung says he receives no payment from the company except dividends.
Samsung did disclose the remuneration of executives including Shin Jong-kyun, co-chief executive and head of the company’s mobile phone division, which suffered a sharp fall in profits last year. Mr Shin’s pay more than doubled last year to Won14.6bn, but most of this came in the first quarter through bonuses linked to Samsung’s strong performance in 2013.
“We should pay attention not to how much executives are paid but to how the amount is decided,” said Kim Sang-jo, a professor at Hansung University. “Most of the top companies don’t have clear guidelines on determining executive pay.”
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