Despite achieving a record operating profit of 2.16 trillion won last year, the company explained that considering the business environment and the targets set, last year’s performance was not as good as it appeared to be. (Image courtesy of Yonhap)
SEOUL, Feb. 7 (Korea Bizwire) – On February 5, a truck hauling a massive 200-inch screen made its way past the LG Twin Towers in Yeouido, Seoul, home to the LG Group’s headquarters.
The screen displayed a message urging the disclosure of a performance system that matches the employees’ efforts, stating, “Reveal a performance system that reflects our blood and sweat.”
The protest was organized by the LG Energy Solution Staff and Engineers Union, marking a unique form of demonstration.
LG Energy Solution announced that this year’s bonuses would be 362% of the average base salary, a significant decrease from last year’s bonuses, which were 870% of the base salary.
Despite achieving a record operating profit of 2.16 trillion won last year, the company explained that considering the business environment and the targets set, last year’s performance was not as good as it appeared to be.
However, employee dissatisfaction is evident on the company’s internal bulletin boards, with numerous posts protesting the decision. Even after CEO Kim Dong-myung held a town hall meeting to appease the employees on February 2, the unrest has not settled.
The organizers of the truck protest plan to continue the anonymous truck rallies until February 29, based on donations from around 1,700 employees.
At the start of the year, conflicts between companies and employees over bonuses are intensifying across key Korean industries such as semiconductors, batteries, and finance.
Disagreements between employees demanding bonuses based on last year’s performance and companies considering this year’s bleak outlook, along with executive bonuses during downturns leading to significant employee dissatisfaction, are contributing to the tension.
Some companies, such as POSCO Holdings, have also faced criticism for awarding bonuses in company shares to top executives amidst claims of emergency management.
The dissatisfaction extends to the semiconductor sector, where Samsung Electronics’ DS (Device Solutions) division announced a 0% OPI (Operational Performance Incentive) for the first time since 2014, sparking outrage among employees accustomed to significant bonuses.
Competitor SK Hynix’s decision to distribute stock and bonuses only added fuel to the fire.
Samsung Electronics employees are questioning why they should bear the brunt of performance downturns, especially when management received hefty bonuses for improving the competitive future of the semiconductor business.
Despite LG Innotek’s record sales, the company saw its operating profits drop by 34.7% and set its bonus at 240% of the base salary, leading to employee dissatisfaction compared to other companies.
The demand for transparency in bonus calculation criteria is growing, with employees questioning the fairness of the methods used. Some are even considering legal action over discrepancies in bonus rates between parent companies and subsidiaries, highlighting the disparity as unfair.
Professor Suh Yong-gu from Sookmyung Women’s University’s School of Business suggests that companies need to establish and transparently disclose consistent and objective bonus rates, especially as younger employees, who have shorter average tenures, are particularly sensitive to fair compensation for their performance.
Kevin Lee (kevinlee@koreabizwire.com)
