The Financial Supervisory Services is set to launch a probe into executive compensation in the domestic banking industry as the pay of top officials at financial holding companies and banks seems not to be directly linked to performance.

According to reports, KB Financial Group Inc. paid a total of 4.36 billion won last year to its chairman, Euh Yoon-dae, and its president, Lim Young-rok, with Euh’s share believed to be around 3 billion won.

Euh, who is scheduled to step down next month handing over his post to Lim, is likely to receive a handsome stock grant worth hundreds of millions of won.

The problem is that the generous compensation for the outgoing KB chief is not based on his performance. Last year, the financial holding company earned 1.7 trillion won in net profit, down 28 percent from 2.37 trillion won in 2011. Euh also suffered setbacks in a couple of takeover attempts.

Despite the disappointing performance, the average annual pay of the company’s registered executives, including Euh and Lim, jumped 25 percent ― from 313 million won in 2011 to 392 million won.

The mismatch between executive compensation and performance was not limited to KB Financial.

Shinhan Financial Group Co. saw its net profit drop from 3.1 trillion won in 2011 to 2.3 trillion won in 2012. Yet the annual income of its registered executives rose from 509 million won to 714 million won.

The same is true of Woori Finance Holdings Co., whose net profit dropped to about 1.6 trillion won last year from 2.1 trillion won in 2011. Nevertheless, the ailing company increased remuneration for its top executives.

Last year, banks’ performances were at their worst since the early 2000s as their interest income fell sharply amid prolonged low interest rates. Bad loans surged past 20 trillion won, undermining their financial soundness.

Nevertheless, bank CEOs fattened their paychecks, turning a blind eye to the business conditions. Banks should not forget the huge sacrifice taxpayers made to bail them out in the wake of the 1997-98 financial crisis. The government has not yet recovered more than 37 percent of the 168.7 trillion won it put into the banking sector.

The planned investigation by the Financial Supervisory Services is justified. The regulator needs to ensure that the executive pay in the banking sector is linked to performance. It needs to come up with a system that helps companies compensate their executives in a reasonable way.