Korea Targets Higher Transparency With New Executive Pay and Voting Disclosures (Yonhap)
SEOUL, Nov. 17 (Korea Bizwire) — South Korea plans to impose stricter disclosure requirements on listed companies’ executive compensation and expand access to shareholder voting information, in a move aimed at improving market transparency and strengthening investor rights, the Financial Services Commission (FSC) announced Sunday.
Under the reform package — titled Measures to Improve Corporate Disclosure for Better Market Access and Shareholder Protection — companies will be required to reveal in far greater detail how they determine executive pay, including clear links to earnings, stock performance and other quantifiable results.
The changes come amid longstanding criticism that Korean firms provide only vague justifications such as “considering work performance,” with little explanation of how compensation reflects actual corporate outcomes.
Currently, stock-based compensation such as restricted shares is disclosed separately from executive pay, often only by number of shares, without converting the value into cash terms. In addition, many forms of stock compensation do not require disclosure on a per-executive basis, making it difficult for shareholders to grasp the true scale of rewards.
The FSC said the revised rules will require companies to publish three-year data on shareholder returns and operating profit alongside compensation disclosures, while also itemizing the rationale for each component of executive pay.
A view of downtown Seoul with clusters of corporate buildings. (Yonhap)
Unrealized stock-based awards must be reported in both share counts and cash-equivalent value, and all stock-based compensation — not only stock options — must be disclosed individually for each executive.
“This will encourage firms to more closely align executive pay with performance indicators such as earnings or stock prices,” said Choi Chi-yeon, head of the FSC’s Fair Market Division.
The reforms also seek to broaden access to shareholder voting information. Companies will be obligated to disclose approval rates for each agenda item at annual general meetings, not only the overall outcome. To ease the congested late-March shareholder-meeting season, the FSC will offer additional incentives for firms that shift their meetings to April.
Foreign investors’ access to information will also expand significantly. The requirement for English-language filings — currently limited to KOSPI-listed companies with assets above 10 trillion won — will be extended to firms with assets above 2 trillion won, with the number of disclosure items doubled.
Large companies will also need to submit English filings on the same day they file Korean documents. By 2028, all KOSPI-listed companies will be required to provide English disclosures, with similar rules for large KOSDAQ firms under review.
The Korea Exchange will bolster translation support and upgrade its English disclosure platform to help companies meet the new standards.
The FSC will gather public comments through Dec. 8, finalize the rule revisions after regulatory review, and implement them in the first half of next year.
M. H. Lee (mhlee@koreabizwire.com)
