Wage Gap Among Korean Employees Averages 24 Times
Former KakaoTalk CEO Namgung Hun Tops the List
Google CEO Earns 3 Trillion Won ($2.5 billion)
According to a study by Leaders Index, an enterprise analysis institute, the salary gap between executives and employees at major Korean companies has widened. The study analyzed 291 companies among the top 500 in sales that disclosed employees earning annual salaries of over 500 million won ($417,000).
According to the Leaders Index, the highest-paid executives at major domestic companies last year (2023) received 24 times the average employee salary. This is primarily due to the increase in executive salaries, while employee salaries have decreased.
The study found that the top earners at the 291 major companies analyzed received an average of 2.09 billion won ($1.74 million), 24.1 times more than the average employee salary of 87.13 million won ($72,600). This is a more significant gap than the previous year, 22.7 times.
The study excluded severance payments from the “salary king” and included profits from exercising stock options. The average employee salary used in the analysis excluded the compensation of unregistered executives.
The wage gap between the CEO and average employees was the highest in the retail industry, at 35.8 times.
The retail industry’s “salary king” received an average annual salary of 2.09 billion won ($1.74 million) last year (2023), while the average employee received 58.41 million won ($48,700).
The food and beverage industry followed with a 34.9-times gap, the IT and electronics industry with 31.7 times, the service industry with 31 times, and the automotive and parts industry with 28.3 times.
The industry with the smallest wage gap was the financial industry. The highest earner in the banking sector received an average of 1.04 billion won ($868,000), 9.6 times the average employee salary of 192 million won ($160,000).
On a company basis, the most significant wage gap was not in the retail industry but in Kakao. Former Kakao CEO Namgung Hun set a record by receiving 98 times the average employee salary, including 943.2 million won ($786,000) from the exercise of stock options, for a total of 989.9 million won ($825,000). On the other hand, Kakao employees received an average salary of 99.78 million won ($83,000), a significant decrease of 27.2% from the previous year.
The top five companies with the highest wage gaps also included Shinsegae E-Mart Chairman Chung Yong-jin, who received 36.99 billion won ($30.8 million), 77.1 times the average employee salary, Hyundai Motor Group Chairman Euisun Chung with 82.1 billion won ($68.4 million), 70.1 times the average employee salary, Hite Jinro Chairman Park Mun Deok with 77.26 billion won ($64.4 million), 68 times the average employee salary and NCSoft CEO Kim Taek-jin with 72.46 billion won ($60.4 million), 67.7 times the average employee salary.
Meanwhile, the average salary of employees exceeded 100 million won ($83,000) in 82 companies, accounting for 28.2% of the total, a decrease of 7 companies from the previous year. The company with the highest average salary was S-Oil, with 168.22 million won ($140,000). KB Financial Group followed this with 162.9 million won ($136,000), Shinhan Financial Group with 154.43 million won ($128,000), SK Energy with 152.51 million won ($127,000), and SK Telecom with 145.93 million won ($121,000).
The person with the highest salary in each company was Lotte Group Chairman Shin Dong-bin, who received 212.81 billion won ($177 million) from seven subsidiaries last year. This was followed by Hyundai Motor Group Chairman Chung Eui-sun, who received 122.1 billion won, and Hanwha Group Chairman Kim Seung-Youn, who received 108.2 billion won ($90 million).
The wage gap in Korean companies is much smaller than in American companies.
According to AP, the average salary of a CEO in the US S&P 500 in 2022 was $14.8 million, or about 20.2 billion won ($16.8 million). This is 192 times the average employee salary of $77,178, or about 140 million won ($116,000).
The CEO with the highest salary was Sundar Pichai of Google (Alphabet), who received a total of $226 million, or about 300 billion won ($250 million), including stock bonuses, which is 808 times the average employee salary of $279,802, or about 370 million won ($308,000). Apple CEO Tim Cook, one of the companies with the highest wage gap in the US, received $99.42 million, or about 130 billion won ($108 million), which is 1,177 times more than the average employee salary.
Experts predict that the gap between the average salary of a CEO and an employee in Korea will widen further, as is the case overseas. Park Joo-geun, the representative of Leaders Index, said, “Compared with top global companies, the salary gap in Korean companies is not high, and it can widen shortly. However, shareholder surveillance and demands related to business performance will also increase.”
He added, “In the US stock market, shareholders don’t mind if the company’s management receives high salaries as long as they record sufficient performance.”
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