Fat Cats Must Be Paid According to Merit

Disgraced SK Group chairman Chey Tae-won earned W30.1 billion last year as a registered director of four affiliates owned by his conglomerate (US$1=W1,064). With that Chey was the most highly paid fat cat among corporate CEOs.

Chey's base salary was W9.4 billion, and he made another W20.7 billion in performance bonuses due to his achievements in 2012, though he did not receive any bonuses for last year.

The equally disgraced Hanwha Group chairman Kim Seung-youn earned W13.1 billion in salaries last year and Hyundai Motor chairman Chung Mong-koo W14 billion. The salaries of Samsung Group chairman Lee Kun-hee and his son and vice chairman Lee Jae-yong were not made public since they are not registered as directors.

The salaries of chaebol chiefs are not that high when compared to the money their counterparts in the western corporate world earn. For instance, Robert Mansfield, former senior vice president of technologies at Apple, made more than W90 billion in 2012. But not many Koreans would say Chey and Kim deserved their exorbitant salaries. Chey was arrested in January last year on charges of embezzling W45 billion from his conglomerate and sentenced to four years in prison. Kim was arrested in August 2012 and sentenced to four years in jail, only to be released in February of this year on probation.

Both tycoons spent most of last year in jail and were barely able to take part in managing their businesses. It is a mystery whether the boards of SK and Hanwha even bothered to discuss whether Chey and Kim deserved the money.

Some chaebol chiefs walk away with fat paychecks even after their companies post losses. GS Group chairman Huh Chang-soo earned W2.1 billion from GS Corp. and W1.73 billion from GS Engineering and Construction last year, yet the company posted a loss of W827.3 billion. Kumho Petrochemical chairman Park Chan-koo earned W4.2 billion last year, while his company lost W42.7 billion.

Their staff probably sweated bullets last year over the possibility of smaller paychecks or even losing their jobs. Perhaps staff at these conglomerates would have been willing to accept pay cuts if their executives set examples by accepting smaller paychecks themselves to take responsibilities for the poor performance.

What must their staff be thinking now?

If chaebol chiefs and other CEOs continue to be paid exorbitant salaries that do not reflect their corporate performance, the same thing will happen here that is already happen in the U.S. and Europe, where there is a mounting public outcry to regulate the stellar wages top business executives receive.

Top business executives must make sure their rewards are justifiable in order to prevent a breakdown in social stability.

englishnews@chosun.com / Apr. 01, 2014 13:10 KST