Significant Increase in Financial Holding Company Chairperson's Compensation... Employees and Shareholders Remain Unchanged
'Salary King' Yoon Jong-kyu, KB Financial Chairman with Record High Performance
[Asia Economy Reporter Park Sun-mi] As the compensation systems for executives and employees of domestic financial holding companies were disclosed last year, the chairmen of financial holding companies who achieved the highest performance saw their compensation significantly increase, while regular employees received only limited raises.
According to the recently disclosed "Governance and Compensation System Annual Report" by major financial holding companies such as KB, Shinhan, and Hana, last year Yoon Jong-kyu, Chairman of KB Financial Group, received a total compensation of 2.66 billion KRW, including a performance bonus of 1.86 billion KRW.
The compensation received by Chairman Yoon increased by 1.07 billion KRW compared to 2019, making it the highest among the chairmen of the four major financial holding companies. Meanwhile, among KB Financial Group's average annual salary of 166 million KRW for executives and employees, the average salary for employees excluding executives remained at 133 million KRW, the same as in 2019. Hana Financial Group's Chairman Kim Jung-tae also received a total compensation of 2.63 billion KRW last year, including a performance bonus of 1.79 billion KRW, which is 140 million KRW higher than in 2019. However, the average compensation per Hana Financial employee decreased from 124 million KRW in 2019 to 115 million KRW.
However, the situation is somewhat different for Shinhan Financial Group. Shinhan Financial Group's Chairman Cho Yong-byeong received a total compensation of 1.3 billion KRW last year, including a performance bonus of 500 million KRW. The compensation Chairman Cho received last year was the same as in 2019. Employee compensation saw a slight increase. The average compensation per employee rose by more than 7% from 125 million KRW in 2019 to 134 million KRW.
Shareholders who invested in financial holding companies did not properly share in the profits. Considering the COVID-19 situation, financial authorities recommended dividend restrictions on financial holding companies, leading KB Financial Group and Hana Financial Group to lower their dividend payout ratios to 20%, down by 6 percentage points and 5.78 percentage points respectively from 2019. Only Shinhan Financial Group exceptionally passed the Financial Supervisory Service's ‘L-shaped (long-term economic recession assumption)’ stress test and set its dividend payout ratio at 22.7%.
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Last year’s performance of major domestic financial holding companies reached record highs. KB Financial Group posted a net profit of 3.4552 trillion KRW last year, marking its highest-ever performance, and Shinhan Financial Group also recorded a record net profit of 3.4146 trillion KRW. Hana Financial Group achieved its highest net profit since its establishment as a holding company, with 2.6372 trillion KRW last year.
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