Profit-linked bonuses at Samsung, SK unlikely to spread across Korean biz

The substantial profit-based performance bonuses prevalent at Samsung Electronics and SK hynix appear unlikely to become commonplace across Korean businesses. The government is contemplating amending regulations to mandate shareholder approval for such bonus plans. Industry Minister Kim Jung-kwan, addressing a press forum on Thursday, expressed his opposition to tying employee incentives directly to a company's operating profit.

He emphasized that the government is contemplating revisions to the Commercial Act and the Financial Investment Services and Capital Markets Act, which would necessitate shareholder endorsement before companies could pay performance bonuses. This stance emerged as labor unions at major corporations increasingly advocate for allocating a portion of operating profit to fund performance bonuses.

In the previous year, SK hynix had reached a deal with its labor union, allocating 10 percent of its operating profit towards performance bonuses to share in the significant profits generated by its memory chip business. Similarly, in May, Samsung Electronics had agreed to allocate 10.5 percent of its operating profit for performance bonuses.