The Financial Supervisory Service has launched a full-fledged investigation into the so-called “propriety” of the income level for chief executives in the financial industry.

The investigation comes as criticism is mounting that CEOs of financial companies were paid “excessively” high amounts despite their companies’ falling profitability.

Regulatory officials said that “despite an overall drop in earnings of financial firms last year, some CEOs and other board members were found to have enjoyed higher salaries.”

The annual pay packet, including a variety of performance-based bonuses, for Shinhan Financial Group chairman Han Dong-woo reportedly reached 2.75 billion won ($2.5 million) in 2012, according to the FSS.

The figure indicates that Han’s monthly and daily income comes to 220 million won and 7.3 million won, respectively, on average.

KB Financial Group provided its outgoing chairman Euh Yoon-dae and president Lim Young-rok, who was named the next chief, with a collective paycheck worth 4.3 billion won last year.

Combined wages for Hana Financial Group’s seven board members including chairman Kim Jung-tai and business unit CEOs were tallied at 2.9 billion won over the corresponding period.

Standard Chartered Bank Korea posted a few of the highest levels in the local financial sector with its average annual salary for members of its board of directors reaching 873 million won.

The average salary for executives at Shinhan Financial came to 714 million won, followed by Woori Financial with 600 million won, Industrial Bank of Korea with 401 million won and KB Financial with 392 million won.

In contrast, the financial firms’ average net profit fell sharply last year.

“We’ve uncovered some problems in performance-based bonus payment systems at some banks,” an FSS official said. “We plan to make inquiries into their salary calculation methods and whether those are appropriate.”

But he clarified that the supervisory agency was not entitled to specify an optimum level for the executives’ income nor issue a warning.

The FSS is only likely to induce lowering the average level through verbal instruction to financial firms when it rules that pay goes far beyond common sense or a tolerable ceiling in the market compared to the firms’ yearly earnings.

By Kim Yon-se (kys@heraldcorp.com)