Seoul Yeouido Financial District Skyline (Image courtesy of Yonhap)
SEOUL, May 15 (Korea Bizwire) — The country’s financial watchdog said Thursday that it will prod financial firms to manage their incentive systems in a proper and reasonable manner.
The Financial Supervisory Service (FSS) said incentive systems can carry risks if not properly managed, which also can hurt financial institutions’ soundness as well as the financial stability in the broader sector.
Some financial firms have been under fire for offering hefty incentives to employees and C-suite executives despite soured real estate development projects.
Also, some financial firms have been lax in managing incentive systems in accordance with regulatory guidelines, the watchdog said.
Data from the FSS showed that banks, securities firms and other financial institutions doled out some 1.06 trillion won (US$758 million) worth of incentives such as performance-based pays, profit-sharing and commissions to employees and executives in 2023, down 8.8 percent from 1.16 trillion won the previous year.
Investment companies offered the largest 660 billion won worth of incentives to their employees and executives in 2023, down 9.5 percent from a year earlier, trailed by banks with 159 billion won, up 8.3 percent, and insurance firms with 143 billion won, down 18 percent.
Cash grants were the most favored form with 66.8 percent in 2023, followed by stocks and stock-related products with 20.6 percent and others with 12.6 percent, the data showed.
(Yonhap)
