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CEO Compensation in Korea: Is It Different than in the US? A Comparison between Korean Non-Life Insurance Firms and US Property-Liability Insurance Firms

Author

Listed:
  • Sangyong Han

    (Korea Insurance Research Institute (KIRI), 38 Gukjegeumyung-ro 6-gil, Youngdeungpo-gu, Seoul 07328, Korea)

  • Hyejeong Mun

    (Korea Insurance Research Institute (KIRI), 38 Gukjegeumyung-ro 6-gil, Youngdeungpo-gu, Seoul 07328, Korea)

Abstract

This study investigates the level, structure, and pay-for-performance relationship of CEO compensation in Korean non-life insurance companies. We find that seniority plays an important role in setting CEO compensation practices and that performance-based pay, such as bonus, is more effective than base salary in enhancing shareholder value for Korean non-life insurers. Unlike previous studies that show that international differences in executive pay have been diminished considerably since the 2000s, our evidence shows that there is a remarkable difference in CEO compensation between Korean non-life insurers and U.S. property-liability insurers. Furthermore, we provide evidence that the pay-performance relationship is weaker in Korean non-life insurance companies relative to US counterparts, suggesting that it is necessary for Korean non-life insurers to tie performance-based compensation more closely to shareholder value in the design of CEO compensation.

Suggested Citation

  • Sangyong Han & Hyejeong Mun, 2021. "CEO Compensation in Korea: Is It Different than in the US? A Comparison between Korean Non-Life Insurance Firms and US Property-Liability Insurance Firms," IJFS, MDPI, vol. 9(4), pages 1-20, November.
    • Handle: RePEc:gam:jijfss:v:9:y:2021:i:4:p:61-:d:671412
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