Going forward, listed companies will disclose executive compensation in detail by individual. In addition to regular salary, they will state the restricted stock (RS) received as performance pay and its cash-equivalent value. Listed companies must also spell out in detail the benchmarks used to calculate an executive's pay, such as operating profit or total shareholder return (TSR).
On the 16th, the Financial Services Commission (FSC) announced measures to improve corporate disclosures to enhance accessibility to the domestic capital market and strengthen shareholder rights. The plan requires listed companies to disclose voting results, including approval rates for each agenda item, when announcing outcomes of shareholders meetings, and it significantly expands the pool of entities required to file English disclosures.
Starting in May next year, individual stock-based compensation for executives receiving 500 million won or more will be disclosed in detail. The disclosure will show, within the executive's compensation aggregates, the type, quantity, and amount of stock-based compensation such as RS, and will also notify investors of compensation not included in the compensation aggregates, such as stock options.
Currently, business reports list only each executive's compensation aggregates, making it difficult to grasp the specifics of what the executive receives. Because executive compensation indirectly indicates the company's actual management performance, efficiency, and financial soundness, the financial authorities believe investors should be informed accurately.
In addition, the Financial Services Commission (FSC) plans to revise corporate disclosure forms to require disclosure of the basis for calculating executive pay. By listing, along with executive compensation aggregates, metrics such as total shareholder return and operating profit over the past three years, the strengthened disclosure rules will allow investors to assess whether the compensation granted to executives is appropriate.
In the case of U.S.-listed companies, they disclose not only individual compensation for the CEO and highly paid executives but also explain the correlation between executive pay and financial performance.
In addition, starting in March next year, the Financial Services Commission (FSC) will revise relevant rules to require listed companies to disclose, as a mandate, the voting results for each shareholders meeting agenda item, including approval rates.
The scope of entities required to file English disclosures—currently KOSPI-listed companies with assets of 10 trillion won or more (with foreign equity of 5% or more)—will be expanded to all KOSPI-listed companies with assets of 2 trillion won or more. As a result, the number of companies subject to mandatory English disclosure is expected to increase from 111 to 265.
The Financial Services Commission (FSC) said, "We will push to revise the relevant rules for these improvements," and added, "With this step, we expect better access to the capital market for global investors and the ability to provide more information to shareholders."