Wednesday, April 23, 2014
Korea vs. U.S.: Executive salary gap
The companies recently reported on the annual salaries paid to these executives based on laws calling for disclosure for those who are registered on the corporate board and receiving 500 million won ($481,000) or more.
Most of the population seemed to think that these executives were getting paid too much.
Out of the 200, the average pay package of the highest-paid 20 executives reached $22.71 million.
Back in Korea, the highest-paid 20 executives out of the 640 who were obligated to reveal their salaries were found to be receiving an average 8.44 billion won.
This shows that the U.S. executives were paid about three times the amount of their Korean counterparts.
Among the U.S. companies, 200 executives were paid more than $2 million annually. Their pay packages included not only monthly salaries, but bonuses and stock options as well.
http://www.koreaherald.com/view.php?ud=20140414001165
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3 comments:
When looking at the salaries of the US executives, they are mostly based on performance, which is a perfect example of the validity of the statement, "people respond to incentives." When their pay is based on the performance of their firm, their interests and the interests of the company align, and there is an increase in performance and value.
US salaries are based on performance. There is also the idea in the CEO world that if one firm doesn't want to pay you millions a year after you have a good track record a different firm will. There are some executives that get paid a very little salaries and then are rewarded with stock options and benefits if their firm performs well. I don't see an issue with this. The brightest minds in the world should be running the largest firms. Perhaps these Korean CEOs should move to the US?
This is a interesting topic considering Warren Buffett recently, as their largest share owner, abstained from Coca-Cola's equity plan vote. He believed that the pay-for-performance plan was excessive. It will be interesting if his actions will spark a trend with large share owners trying to limit executive compensation.
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