April 1 (Bloomberg) -- Hyundai Motor Co. Chairman Chung Mong Koo revealed his salary for the first time after South Korea stepped up disclosure rules for executive pay to enhance transparency at the nation’s family-run business empires.
The billionaire received 14 billion won ($13 million) in annual compensation from Hyundai Motor, Hyundai Mobis Co. and Hyundai Steel Co., according to annual reports filed yesterday. He got 5.6 billion won from Hyundai Motor, while Mobis and Hyundai Steel each paid him 4.2 billion won, according to the filings.
Chung, 76, is the nation’s wealthiest man to be forced to unveil his pay after South Korea began requiring its biggest companies to provide more executive-compensation details amid increasing scrutiny of family-run industrial groups, known locally as the chaebol, which dominate the economy. President Park Geun Hye has pledged to clamp down on chaebol practices that undermine the interests of minority shareholders.
“With the disclosure of the executives’ compensation, the pressure to deliver better profits will increase,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd., which oversees about $8.9 billion including Hyundai shares. “Still, only directors are required to disclose their pay, therefore, the government and companies should take steps to expand the scope and provide more in-depth information on compensation.”
The Financial Investment Services and Capital Markets Act was revised late November to make it compulsory for about 2,000 companies to provide compensation details, including bonus and severance payouts of directors earning at least 500 million won in their annual reports. Previously, companies only disclosed an aggregate amount paid out to executives.
Shares of Hyundai rose 1.2 percent to 251,000 won yesterday in Seoul. They have gained 6.1 percent this year.
In January, Chung forecast Hyundai’s sales volume in 2014 will grow at the weakest pace in eight years as competition intensifies and a stronger won hampers exports. Hyundai Motor in 2013 posted its first profit decline in five years as the Korean currency strengthened.
Chung is South Korea’s second richest individual with a net worth of $7.1 billion as of March 28, according to the Bloomberg Billionaire’s Index.
In Japan, where publicly traded companies have been required to disclose annual executive pay exceeding 100 million yen ($970,000) since 2010, Toyota Motor Corp. President Akio Toyoda total compensation increased 35 percent to 184 million yen in the fiscal year ended March 2013 after profit more than tripled, according to data compiled by Bloomberg.
Nissan Motor Co. Chief Executive Officer Carlos Ghosn earned 988 million yen in salary and bonuses, little changed from a year earlier, as net income increased 0.3 percent.
Executives at U.S. automakers are paid more. Ford Motor Co. CEO Alan Mulally received $23.2 million last year, including $2 million in salary, $5.88 million in bonus and $15.3 million in stock, options and other compensation, Dearborn, Michigan-based Ford said on March 28. That’s an increase of 11 percent.
General Motors Co.’s first female CEO Mary Barra may receive total compensation this year of $14.4 million, the Detroit-based company said in a statement in February.
In 2012, the directors at South Korea’s top 500 companies earned an average of 639 million won, or about $600,000, according to data from CEOSCORE, a Seoul-based organization that monitors the chaebol.
By comparison, CEOs at S&P 500 companies in 2012 earned on average $12.3 million, according to the American Federation of Labor-Congress of Industrial Organizations, an umbrella federation for U.S. unions. The average worker took home about $34,645, it said.
Chung’s son Eui Sun, vice chairman at Hyundai Motor, was awarded 1.83 billion won by the company and 600 million won at Hyundai Mobis last year, according to yesterday’s filings. The younger Chung also holds directorships at Kia Motors Corp. and Hyundai Steel but both companies did not disclose his pay.
Some top executives at chaebols have either given up their director titles or don’t hold the position, allowing them to withhold details of their salaries.
One such person is Samsung Electronics Co. Chairman Lee Kun Hee, South Korea’s richest man, and his son, Vice Chairman Lee Jae Yong. They won’t be disclosing their pay as both don’t hold director positions.
Samsung’s three co-CEOs were paid 18.1 billion won combined, according to a separate regulatory filing yesterday. Shin Jong Kyun, head of Samsung Electronics’ mobile unit, was paid 6.21 billion in 2013; Kwon Oh Hyun, head of Samsung’s component businesses, was paid 6.77 billion won; while Yoon Boo Keun, head of the consumer electronics business, was paid 5.09 billion won.
--With assistance from Anna Mukai in Tokyo and Cynthia Kim, Sharon Cho and Jungah Lee in Seoul.