'Hourly Wage 200,000 Won' Outside Directors of 5 Major Financial Institutions... Also Receive Separate Allowances and Benefits

36 Outside Directors of 5 Major Financial Firms... Neglected Duties
ISS "What Were They Doing During Lime Scandal and Hiring Corruption?"

Outside directors of the five major financial holding companies (KB, Shinhan, Hana, Woori, and NongHyup) received an average compensation of over 75 million KRW last year. Their average working hours were less than 400 hours, and their hourly wage approached 200,000 KRW.

According to the "2023 Annual Report on Governance and Compensation System" disclosed by the five major financial holding companies on the 10th, outside directors of these companies received an average compensation of 75.31 million KRW last year. This is the average compensation of 36 outside directors excluding Jeong Seong-bae, an outside director of Woori Financial Group who did not receive compensation due to internal company regulations as the CEO of IMM Investment.

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At KB Financial Group, 3 out of 7 outside directors received more than 100 million KRW last year. Among Shinhan Financial Group’s 9 outside directors, 7 received compensation in the 80 million KRW range, and outside directors of Hana Financial Group and Woori Financial Group also received more than 80 million KRW. However, the average compensation of the 7 outside directors at NongHyup Financial Group was 57.01 million KRW, which was lower than the other holding companies.

In particular, outside directors of the financial holding companies received a basic monthly salary of around 4 to 4.5 million KRW last year. The basic salary was paid even in months when no board meetings were held.

They also received an additional allowance of 1 million KRW each time they attended a board meeting, and in many cases, a car with a driver was provided when attending meetings. A comprehensive annual health checkup, which was not included in the compensation, was also provided. Shinhan Financial Group offered health checkups not only to the outside directors themselves but also to their spouses.

The 37 outside directors of the five major financial holding companies worked an average of 390 hours per person last year. There was a wide range of individual differences, from the mid-500 hours to the low 200 hours. The average hourly wage was about 190,000 KRW. The working hours of outside directors reportedly included time spent individually reviewing agenda items before various meetings were held.

The problem is that despite receiving such high compensation, they almost always voted in favor of all agenda items, leading to evaluations that they neglected their fundamental duty of "monitoring and checking management."

Among the 162 "resolution agenda items" discussed at the board meetings of the five major financial holding companies last year, there was not a single case where an outside director cast a dissenting vote. The same was true for the "Risk Management Committee," which is responsible for timely recognizing, measuring, monitoring, and controlling risks arising from various transactions. For example, mentions of the Hong Kong H-Index ELS and overseas commercial real estate, which emerged as the biggest potential risk factors in the financial sector from the second half of last year, appeared in only two of the reports from the five major financial holding companies.

Criticism has been continuously raised not only domestically by financial authorities but also overseas that the outside directors of major domestic financial holding companies fail to properly monitor or check management. Earlier last year, the world's largest proxy advisory firm ISS recommended shareholders to oppose the reappointment of outside director candidates at the general meetings of the three major financial holding companies (Shinhan, Hana, and Woori) in its report on agenda items.

They judged that the outside directors were not qualified for reappointment as they collectively failed to respond to executives with legal risks related to major incidents such as the Lime and DLF (Derivative Linked Fund) scandals and recruitment irregularities at each financial holding company.

This content was produced with the assistance of AI translation services.