Firms must disclose executive pay alongside corporate performance starting with this year's semiannual reports
Hanwha Ocean and Doosan Enerbility establish new compensation committees
Many companies expand committee activity
Transparency requirements on executive pay expected to deepen
Corporate compensation committee activity picked up sharply last year as the government pushed to make executive pay standards more transparent under a broader shareholder-friendly policy drive. Doosan Group's key affiliates and Hanwha Ocean established new compensation committees, and the overall number of committee meetings across the corporate sector increased.
According to the Financial Supervisory Service's DART system, Doosan Enerbility set up a compensation committee under its board of directors for the first time in March last year, composed of four outside directors, to review executive pay standards and related regulations. Previously, executive remuneration had been set through internal rules, but it is now handled as a formal agenda item before the board.
In its sustainability report, Doosan Enerbility described its CEO bonus-setting process as one that "calculates the number of phantom shares by reflecting quantitative indicators such as financial performance targets and strategic performance targets, as well as qualitative assessments of non-quantifiable results, before finalizing the amount through compensation committee approval." Beyond Doosan Enerbility, Doosan Group installed compensation committees at all seven of its listed affiliates in the first half of last year.
Hanwha Ocean established its compensation committee in December last year, though it has yet to hold a separate committee meeting. All three members of Hanwha Ocean's compensation committee are outside directors. Hanwha Ocean became in effect the last of Hanwha Group's core affiliates to set up a compensation committee. Hanwha Corp., which established its committee at the end of 2024, held four meetings last year and handled 10 agenda items.
Several companies also expanded their compensation committee activity. E-mart increased its compensation committee meetings from three in 2024 to five last year, resolving agenda items including second-half executive bonus payments and the granting of restricted stock units. Daishin Securities saw its committee meetings rise from three to five over the same period. Hanwha Vision, which had not convened its compensation committee once in 2023 or 2024, held one meeting last year.
OCI Holdings explicitly listed among its board's priorities for this year "the need to strengthen the specificity and thoroughness of executive compensation reporting to the compensation committee."
The trend toward formalizing executive pay standards through compensation committees is expected to deepen further this year. The Lee Jae-myung administration has been stepping up scrutiny of how companies set executive pay as part of its shareholder-friendly policy agenda. "The atmosphere no longer allows executive pay to be set by convention the way it used to be," a business community official said. "Shareholder oversight has also intensified in line with government policy."
More immediately, companies are now required to disclose executive compensation alongside corporate performance starting with this year's semiannual reports. The measure follows a sweeping overhaul of executive pay disclosure rules the Financial Supervisory Service announced in April. The core change mandates that executive remuneration be disclosed together with corporate performance metrics such as total shareholder return — a significant tightening from the previous requirement to report only the total amount of executive pay.
Disclosure requirements for stock-based executive compensation have also been expanded, allowing investors to see both the value of stock awards already paid out and the balance of awards not yet exercised. The change is designed to give investors a clearer picture of the full scope of stock compensation granted to executives.
klee@heraldcorp.com
