Hyundai Motor Group Chairman Chung Eui-sun to Receive Salary from Kia Starting This Year

[Korea Financial Times, Gwak Horyung] Kia has decided to start paying a salary to Hyundai Motor Group Chairman Chung Eui-sun, who has been serving as an inside director at the company since 2019. Despite holding this position for years, Chung had not received any compensation from Kia until now.

An industry insider commented, "Kia’s decision to pay Chung a salary reflects the company’s growing status within the group as it surpasses Hyundai Motor in profitability. This move also signifies an increase in Chung’s responsibilities."

Kia will hold its 81st Annual General Meeting (AGM) on March 14 at EL Tower in Seocho-gu, Seoul. The agenda includes the approval of the 2024 financial statements, amendments to the Articles of Incorporation to add real estate development to its business scope, and the election of directors. Inside Directors Chung Eui-sun and Song Ho-sung are up for reappointment, while Kim Seung-jun, Executive Vice President and Chief Financial Officer (CFO), has been newly nominated. Outside Director Shin Hyun-jung is also set for reappointment. The meeting will also address an increase in the director compensation ceiling from KRW 8 billion to KRW 17.5 billion.

The reason for raising the director compensation ceiling is to accommodate the decision to start paying Chung Eui-sun this year. Until now, he had only received salaries from Hyundai Motor and Hyundai Mobis.

Chung has been with Kia as a non-executive director since 2016 and as an inside director since 2019 but had not been compensated for these roles. Although he is presumed to have received a salary during his tenure as Kia’s CEO from 2005 to 2009, it is difficult to verify the exact amount since individual executive compensation disclosure was not mandatory before 2013.

Kia explained the increase in the director compensation ceiling, stating, "The decision to compensate Chairman Chung from this year is based on his contribution to Kia’s record-breaking performance and the need to strengthen responsible management amid rapid changes in the automotive industry."

If the resolution to pay Chung a salary at Kia is confirmed at the AGM, he is likely to become the highest-paid executive among South Korean business leaders. The top salary earner in 2023 was Lotte Group Chairman Shin Dong-bin, who received a total of KRW 17.715 billion from five Lotte affiliates.

Chung ranked second, receiving KRW 12.21 billion in the same year. His salary has been rising rapidly, with an average annual increase of about 38% from 2017 to 2023. The most significant jump occurred in 2019, when his salary increased from KRW 2.951 billion in 2018 (when he was promoted to Executive Vice Chairman) to KRW 5.189 billion. After being appointed Chairman in 2020, his salary rose again from KRW 5.98 billion that year to KRW 8.776 billion in 2021. Since then, as Hyundai Motor and Kia have achieved record-breaking performances, Chung’s salary has consistently increased at a double-digit growth rate.

Kia’s proposed increase in the director compensation ceiling is KRW 9.5 billion. However, it is unlikely that the entire increase will go to Chung alone. Even in 2023, when Kia recorded its highest-ever earnings, only KRW 5.5 billion (69%) of the KRW 8 billion ceiling was distributed among nine directors.

Based on this, estimates suggest that Chung’s total compensation from Hyundai Motor, Hyundai Mobis, and Kia this year could reach approximately KRW 20 billion.

At this AGM, Kia also plans to reappoint Chairman Chung and President Song Ho-sung as inside directors, while newly appointing Kim Seung-jun, Executive Vice President and Chief Financial Officer (CFO). The terms for Chung and Song will be three years, whereas Kim, who was recently promoted at the end of last year will serve a one-year term.

Outside director Shin Hyun-jung, a KAIST Distinguished Endowed Chair Professor, is also up for reappointment for a three-year term. If all director appointments are approved, Kia’s board will maintain a structure of four inside directors and five outside directors, totaling nine members. The proportion of outside directors will be 55.6%, while female directors will account for 22%.

The addition of real estate development to Kia’s business scope appears to be related to its certified used car business. Hyundai Motor also added real estate development to its business scope in 2023 to expand its certified used car hubs.

Gwak Horyung (horr@fntimes.com)