Executive Compensation in South Korea: Evidence from New Mandatory Disclosure Since 2013

With recently available information on executive compensation in South Korea, this paper finds some stylized facts about executive pay levels. What we find are as follows: 1) Since 2002, executive pay has risen faster than employee pay, thus, the pay ratio of executive and employee has increased too. 2) The executive compensation of large firms is more volatile than that of small and medium enterprises. So is the pay ratio of large firms. 3) The pay ratio has not increased monotonically though. From 2011, the pay ratio becomes constant mainly because of small and medium size enterprises. In addition, the cross-sectional variation analysis of CEO pay concludes 1) the elasticity of pay with respect to firm size is about 0.18, which is significant and robust in various specifications. 2) The volatility of stock return is negatively related to pay. CEO facing higher firm risk is compensated less. 3) The return on stock only for contemporary year has significant effect on CEO pay. However, past returns cannot account for the current pay. 4) Controlling for firm size, we have insufficient evidence that large business group pay CEOs more than other small and medium enterprises do.