[Deputy Manager Column] The Effectiveness of Disclosing High Earners' Salaries in Securities Firms

[Asia Economy Reporter Lim Jeong-su] Many employees in the securities industry appeared on the so-called 'top-tier salaried workers' list, earning annual salaries of over 500 million KRW. Since Kim Yeon-chu, Assistant Manager at Mirae Asset Daewoo, received an annual salary of 2.2 billion KRW while holding the position of Deputy General Manager at Korea Investment & Securities, the list of high earners in securities firms has become a topic of public interest. The public’s instinct to compare salaries has amplified curiosity and envy, intensifying attention.

Coincidentally, at the time when high earners were dominating various media outlets, securities firms were heading toward a liquidity crisis due to market shocks caused by the COVID-19 pandemic. Large-scale margin calls resulting from hedging of Equity-Linked Securities (ELS) and the failure to refinance asset-backed securities related to Project Financing (PF) became the 'detonators.' In such cases, not only key executives but also general high earners tend to become targets of criticism. In some securities firms, there were calls for accountability regarding the hiring process and promises of high salaries made to experienced hires.

The purpose of disclosing high earners is to enable checks on corporate owners, related parties, and executives who might be receiving unjustly large compensation. Under the Commercial Act, the total salary of registered executives is decided at the shareholders’ meeting, giving shareholders a practical means to oversee executive compensation. Even unjustly high salaries received by related parties who are not registered executives are indirectly influenced through salary disclosure.

However, whether general high earners should also be subject to such oversight is worth reconsidering. High salaries reflect factors such as contribution to performance, competition for talent due to tight labor supply, and the boom in the relevant business sector. Moreover, since most of the salary consists of performance-based bonuses, it is difficult to regard it as unjust compensation. In fact, there appears to be neither a practical means nor a clear justification for oversight.

Disclosing general high earners’ salaries also seems to have no real benefit. Rather than serving as a check, it often devolves into gossip, fosters internal division, or leads to the exposure of private information. If there is no utility in disclosure, it is better not to do it. It is worth reconsidering limiting salary disclosure to registered executives and related parties.