Samsung Securities, Hana Securities, Kyobo Securities, Yuanta Securities Korea, and IBK Securities have been sanctioned by the Financial Supervisory Service for violating the deferred compensation payment regulations.
According to the FSS on the 9th, the current and former executives of these five securities firms received cautionary warnings for these reasons.
These securities firms were found to have violated regulations on deferred compensation payments from 2018 to 2022. The deferred compensation payment regulation requires that more than 40% of the performance compensation for personnel responsible for financial investment business be paid over a period of more than three years. This is intended to prevent an excessive focus on short-term revenue and to ensure that performance compensation is evaluated along with long-term results.
However, it was confirmed that these securities firms paid performance bonuses within three years. The performance bonus system is a matter subject to the approval of the CEO, and it is known that many of the securities firms' CEOs at the time of the violations were included in the sanctions.
Samsung Securities paid performance bonuses for 62 personnel responsible for real estate project financing (PF) that exceeded 100 million won either in a lump sum or over a period of 1 to 2 years. It was also found that, even in cases where payments were made over three years, the first year's allocation was concentrated.
Kyobo Securities also violated the obligation of deferred payments by not pre-establishing the method for calculating performance bonuses for employees involved in real estate PF and paying bonuses at the discretion of department heads. The executives of the other three securities firms received sanctions for similar reasons. However, Shinhan Investment Corp. violated the deferred payment regulations for performance bonuses under 100 million won but did not receive any particular sanctions.
The FSS has been conducting inspections related to deferred compensation payments for securities firms since 2023.