Employees call for more bonuses amid performance disparities

LG Energy Solution employees conduct a demonstration using a truck. [Courtesy of LG Energy Solution employee truck demonstration organizers]

The scale of bonuses at major corporations in South Korea has exhibited significant discrepancies, fueling a growing discontent among employees that demand higher rewards.

According to industry sources on Wednesday, the labor union at Hyundai Motor Co. has recently sent a formal letter to the management, urging fair distribution of special performance bonuses in line with the company’s financial performance.

To solidify a performance-oriented culture, Hyundai Motor and Kia Corp. granted employees an year-end encouragement payment of 4 million won ($3,000) per person in 2022, with an additional special performance bonus of around 4 million won and 10 shares of Hyundai Motor stock last year.

Given the company’s record-breaking operating profit, which increased by 54 percent compared to the previous year, the union is pushing for special performance bonuses that align with this achievement.

Having consecutively achieved record performances, employees at LG Energy Solution Ltd. also staged protests citing inadequate performance bonuses.

On Monday, around 1,700 LG Energy Solution employees conducted a demonstration using a truck in Yeouido, Seoul, where the company’s headquarters are located.

The company said in a labor-management meeting that while the sales target for last year was achieved, it fell short of the operating profit goal due to production cuts and a decline in metal prices.

GS Caltex Co. disbursed performance bonuses equivalent to 40 percent of annual salaries to all employees on January 31, down 10 percentage points from the previous year’s bonus.

Other major players in the oil refinery industry, such as SK innovation Co., S-Oil Corp., and HD Hyundai Oilbank Co., are expected to confirm their bonus scales soon.

Unlike the prosperous year in 2022 when refineries benefited from rising oil prices and strong refining margins, the lackluster financial performance last year may lead to reduced bonus scales for these oil companies this year.

Meanwhile, Hanwha Group on Wednesday announced plans to expand the restricted stock unit (RSU) system with transfer restrictions to all its affiliated companies starting next year.

In 2020, Hanwha became the first Korean listed company to introduce the RSU system, aiming at responsible management and enhancing shareholder value.

Unlike the traditional performance bonus system, where cash is distributed at the end or beginning of the year based on short-term performance criteria, RSU is a long-term performance reward system that grants shares after a certain period.