Why don’t Korean CEOs pick up the mic?

f Mr. chairman, president and CEO want to keep their fat paycheck, they should become more used to mics.

Suh Kyoung-hoThe author is an editorial writer of the JoongAng Ilbo. We hardly see Korean chief executive officers (CEOs) mic’d up. They rarely attend or speak up at conference calls reporting quarterly performances or IR events. The more famous a company is, the more guarded the CEO is. The JoongAng Ilbo recently compared overseas corporate cases with ours.

Big-tech CEOs of multibillion dollar companies like Elon Musk of Tesla, Tim Cook of Apple, and Mark Zuckerberg of Meta are regulars on quarterly earnings calls to answer questions from shareholders. Shareholders and the public can learn the CEO’s thoughts and prospects on corporate outlook. Their financial performances and projections make news with a greater weight owing to CEO’s direct inputs and photos. Masayoshi Son, chairman of Japan’s Softbank, vowed to be more aggressive in the search for investment opportunities in the AI field after years of maintaining a defensive strategy during the earnings call for the first quarter earlier this month as the group’s investment arm, Vision Fund, reported a modest gain, allowing the holding company to pledge a $3.5 billion buyback program.

Earnings calls or IR events of Korean companies are led by chief financial officers (CFO) or staff in the IR office. CFOs commanded the earnings call for the second quarter for the top five companies. “Korean CEOs would fly to see the Olympics, but won’t attend earnings calls,” a fund manager sarcastically noted.

IRs of Korean companies are rarely shared with the public. Companies of the United States, Canada and Japan livestream their corporate briefings and upload the full transcripts on their homepages. The updates help lessen information asymmetry among investors. The Yoon Suk Yeol administration has launched a Value-up program to address the so-called “Korea discount” for Korean shares and corporate value. Changes in the CEO mindset should be as important as bringing systems and an investment environment to date. Active and transparent communication with shareholders and investors is the key to reinvigorating corporate value.

It is true that CFOs can better answer the numerical and financial queries by analysts and fund managers. CEOs also cannot easily comment on sensitive issues like M&As and restructuring, as a slip of the tongue can cause a company a great harm.

But for Korean CEOs, there could be even deeper reasons. The wisdom in the business field is to keep low and out of sight as much as possible. Those who stood out paid the price during authoritarian as well as democratic times. Samsung Group’s late Chairman Lee Kun-hee in 1995 called the Korean administration “third-rate,” politics “fourth-rate” and companies “second-rate.” His comment drew applause from the public and his corporate peers, but he had to suffer for the audacity of “grading” the government and politics.

An owner-CEO may not be able to come forward easily because he or she is the owner. A career CEO also may not come forward because he or she is not the owner. The owner family remains shrouded and protected by the PR team. A board-appointed CEO also may not want to overstep his or her boundary to upset the owner.

The executive compensation packages for the first half showed that many board heads and CEOs packed as much as tens of million dollars. The companies could be that rich and the executives could be worth the value. But exactly what they did for the benefit of their companies and shareholders remains unknown. Some of the mystery could be solved if they speak with shareholders and investors.

In a recent seminar hosted by the Korea Capital Market Institute, a speaker proposed Korea adopt the say-on-pay (SOP) program where shareholders can vote on the remuneration of executives. As stock investors don’t care about national borders, their eye level was heightened. They keep a close watch on business practices around the world and global standards. They are closely watching to see if the third or fourth-generation owners are really worth their hefty salary. The cap on annual compensations for executives and guidelines on remunerations should be decided in the shareholder meetings. If Mr. chairman, president and CEO want to keep their fat paycheck, they should become more used to mics.