Profit-linked bonuses at Samsung, SK unlikely to spread across Korean biz
The hefty profit-based performance bonuses at Samsung Electronics and SK hynix are unlikely to become a new norm among Korean businesses, as the government considers amending regulations to subject such bonus plans to shareholder approval. Speaking at a press forum on Thursday, Industry Minister Kim Jung-kwan said he “opposes linking employee incentives directly to a company’s operating profit,”…
The lucrative profit-based bonuses granted to employees at Samsung Electronics and SK hynix are unlikely to become commonplace across Korean businesses, with the government contemplating amendments to regulations that would require shareholder approval for such incentive plans. Industry Minister Kim Jung-kwan, speaking at a press forum on Thursday, expressed his opposition to directly tying employee incentives to a company's operating profit, and highlighted ongoing discussions with the government to amend the Commercial Act and the Financial Investment Services and Capital Markets Act.
These amendments would necessitate shareholder approval before companies could pay performance bonuses. The push for this change stems from labor unions at major corporations advocating for the allocation of a portion of operating profit towards performance bonuses. Last year, SK hynix entered into an agreement with its labor union, directing 10 percent of its operating profit towards performance bonuses to share the substantial profits earned from its memory chip business.
In May, Samsung Electronics followed suit, agreeing to allocate 10.5 percent of its operating profit to performance bonuses.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
