[Top 100 Companies Report]③ Former Kakao CEO Who Earned 100 Million Won a Day... NCSoft Kim Taek-jin Earned 12.3 Billion Won from Labor Income Alone

Kim Taek-jin, CEO of NCSoft, Tops in Earned Income
NCSoft Also Ranks First in Average Registered Director Salary
LG's Koo Kwang-mo, Kwon Bong-seok, Ha Beom-jong Earn 14.2 Billion KRW
SK's Chey Tae-won, Cho Dae-sik, Jang Dong-hyun, Park Seong-ha Earn 18.9 Billion KRW
Outside Directors Are Mostly from SK... Sweeping 7 out of Top 10 Companies

Editor's NoteThe top 100 companies listed on the domestic stock market by market capitalization are like national representatives in sports. They represent each industry in Korea and lead the economy. The public's expectations are also high. Most stock investors buy shares of these top 100 companies. Job seekers dream of working at these top 100 companies. Every year around the time the cherry blossoms bloom, the top 100 listed companies submit their business reports. The purpose is to self-assess how they performed as key players in Korea over the past year and whether they kept their promises. Asia Economy reviewed the business reports submitted by the top 100 companies by market capitalization as of the end of Q1 this year to check their health status. This is to assess whether they can lead our economy again this year, check for any injuries, and help them understand their strengths and weaknesses compared to other companies.

Last year's 'highest paid' was Cho Soo-yong, former CEO of Kakao, who cashed in 36.4 billion KRW by exercising stock options. Former Kakao executives occupied three of the top five highest salaries. The 2nd and 5th places were also former Kakao executives. They made their fortunes not through salaries or bonuses but by exercising stock options.

Asia Economy conducted a full survey of the compensation of chairmen, presidents, vice presidents, advisors, and consultants of the top 100 companies by market capitalization last year, and found that former CEO Cho Soo-yong topped the list with 36.4 billion KRW. He earned 33.8 billion KRW solely from stock options. Stock options accounted for 92.6% of his total compensation. His retirement pay was 707 million KRW. Second place was Yeo Min-soo, former CEO of Kakao, with 33.4 billion KRW (31.8 billion KRW from stock options), and fifth place was Jung Ui-jung, former head of technology at Kakao, with 9.6 billion KRW (8.7 billion KRW from stock options). They also left the company with large sums from options.

However, the stock price subsequently plummeted, and Kakao suffered from controversies over management 'mukbang' (profiting and leaving). Afterward, Hong Eun-taek, the current CEO of Kakao, publicly declared at the shareholders' meeting on the 28th of last month that he would not exercise stock options unless the stock price doubled. On that day, the stock price was 60,700 KRW.

Executive Compensation Status of the Top 100 Companies by Market Capitalization

Third in compensation among the top 100 companies was Park Sung-wook, former vice chairman of SK Hynix, who earned 17.9 billion KRW, including 8.4 billion KRW from stock options and 7.7 billion KRW in retirement income. NCSoft CEO Kim Taek-jin ranked fourth in salary (12.381 billion KRW) but was effectively first in pure earned income. He received a bonus of 10 billion KRW and a salary of 2.3 billion KRW last year. Excluding one-time incomes such as stock options or retirement pay, he was the highest-paid executive in terms of company earnings.

Among the top 10 highest-paid executives of the top 100 companies, only two remain active in their companies: 4th place Kim Taek-jin, CEO of NCSoft, and 6th place Koo Kwang-mo, Chairman and CEO of LG Corporation (9.5 billion KRW). Eight of the top 10 are former executives or current advisors and consultants. They received retirement pay last year and left their companies.

The company with the highest average salary per registered director was NCSoft. With two registered directors, the total compensation for NCSoft's registered directors was 12.863 billion KRW. However, CEO Kim Taek-jin took most of it. Park Byung-moo, a non-executive director and CEO of VIG Partners, reportedly received less than 500 million KRW. The second highest average salary per registered director was SK Bioscience (5.878 billion KRW), followed by Samsung Electronics (5.786 billion KRW), LG (4.729 billion KRW), and SK (4.729 billion KRW).

LG's registered directors?Chairman Koo Kwang-mo, Vice Chairman Kwon Bong-seok, and President Ha Beom-jong?received a total of 14.186 billion KRW in compensation. SK's registered directors?Chairman Chey Tae-won, Chairman of the SUPEX Council Cho Dae-sik, Vice Chairman Jang Dong-hyun, and President Park Sung-ha?received a total of 18.917 billion KRW. Samsung Electronics had the highest total compensation for registered directors due to the large number of directors. Five registered directors?Vice Chairman Han Jong-hee, President Kyung Kye-hyun, President No Tae-moon, President Park Hak-gyu, and President Lee Jung-bae?received a total of 28.93 billion KRW.

Among the top 100 companies, the company with the lowest average compensation per registered director was pharmaceutical and bio company HLB (156 million KRW). Gangwon Land (166 million KRW) and Korea Electric Power Corporation (179 million KRW) also had average compensations in the 100 million KRW range. Kakao Pay (244 million KRW), S-Oil (271 million KRW), and Lotte Energy Materials (303 million KRW) also had relatively low average compensations.

The pay gap among inside directors of the top 100 companies was larger than expected. Among the top 100 companies by market capitalization, 58 inside directors received less than 500 million KRW in compensation and thus were not subject to disclosure requirements. This accounts for 22.9% of all 253 inside directors of the top 100 companies. Under the Capital Market Act, only those earning 500 million KRW or more are required to disclose their salaries. Simply put, those who earned less than 500 million KRW are not obligated to disclose their compensation. This includes Samsung Heavy Industries President Jung Jin-taek, Hanwha Aerospace CEO Son Jae-il, and Hanmi Pharmaceutical Presidents Im Jong-yoon and Im Jong-hoon, sons of the founder.

Some inside directors who earned less than 500 million KRW in salary still hold large stock options. For example, Scott Brown, inside director of HYBE, holds stock options worth 15.221 billion KRW; Lee Hyuk-jae, head of management support at Celltrion, holds 6.045 billion KRW; and Oh Jong-hoon, SK Hynix's Vice President in charge of R&D in the Americas, holds 2.242 billion KRW in stock options. These executives can enter the top salary ranks anytime by exercising their stock options.

Among the top 100 companies, none of the outside directors disclosed their salaries last year. This means no outside director received 500 million KRW or more from their companies. SK Group was generous to outside directors. Among the top 10 companies with the highest average outside director compensation, seven were SK affiliates. Except for Samsung Electronics (182 million KRW) in first place, the 2nd to 5th places were all SK outside directors: SK Corporation (166 million KRW), SK Telecom (166 million KRW), SK Square (165 million KRW), and SK Hynix (158 million KRW).

Like the average salary of registered directors, the pay gap among outside directors by company was also large. The gap between the highest and lowest average compensation per outside director last year was 4.1 times. Among the top 100 companies, Cosmo Advanced Materials had the lowest outside director compensation at 36 million KRW. Meanwhile, the average compensation per outside director last year was 75.83 million KRW, a 7.7% increase from 70.41 million KRW in 2021.

The dominance of Samsung and SK outside director compensation over other companies indicates that these two groups invest significantly to reduce financial and legal audit risks. In fact, outside directors who also serve on audit committees receive higher compensation than those who do not.

The average compensation of the three Samsung Electronics outside directors who also serve on the audit committee (Kim Han-jo, Kim Sun-wook, Kim Jong-hoon) was 215 million KRW, 43% higher than the 150 million KRW average of the three non-audit committee outside directors (Kim Jun-sung, Heo Eun-nyung, Yoo Myung-hee). SK Telecom's four outside directors who also serve on the audit committee (Kim Yong-hak, Kim Seok-dong, Ahn Jung-ho, Yoon Young-min) earned an average of 167 million KRW, 2.5% more than the single non-audit committee outside director (Kim Jun-mo) who earned 163 million KRW.