SKT's Strong Sales, Bonus Dispute... Issue of Fault Allocation Under Scrutiny

SK Telecom Union Sends Letter to CEO Park Jung-ho
"Concerns Over Significant Decrease in Bonuses Compared to Last Year"
CEO Park Jung-ho: "I Will Communicate Directly with Members"

[Asia Economy Reporter Cha Min-young] SK Telecom, which achieved record-high performance last year despite COVID-19 thanks to efforts to move away from traditional telecommunications, has become embroiled in fairness disputes over profit distribution. The labor union, which raised complaints about performance bonuses, hinted at collective action, stating, "Performance bonuses are expected to be lower compared to 2020 results." Park Jung-ho, CEO of SK Telecom, is seeking solutions, saying he will "communicate directly with members" in response to the union's letter.

According to the telecommunications industry on the 6th, the SK Telecom labor union sent a letter on the 4th to CEO Park Jung-ho under the name of labor union chairman Jeon Hwan-hee, stating, "We cannot help but be concerned as performance bonuses are expected to decrease significantly compared to last year." The union also said, "In recent years, members thought the gradually decreasing performance bonuses were due to deteriorating results. We find the sharply reduced bonuses completely unacceptable."

The union explained that although the performance bonus has not been finalized, the expected total amount is below expectations, making preemptive collective action inevitable. The SK Telecom union judged that the 2020 performance bonus was low compared to results based on the amount of company shares paid through the 'Member Shareholder Participation Program' during the bonus determination process.

Despite the adverse effects of COVID-19, SK Telecom achieved excellent results. SK Telecom recorded consolidated sales of 18.6247 trillion KRW and operating profit of 1.3493 trillion KRW in 2020, marking increases of 5.0% and 21.8%, respectively, compared to the previous year. Yoon Poong-young, SK Telecom's Chief Financial Officer (CFO), also emphasized in a conference call, "We recorded steady growth in every business sector each quarter," adding, "We renewed our record-high performance once again following last year."

The union also argued for reconsidering the size of performance bonuses and changing the criteria for their calculation. They emphasized that both labor and management should work together to abolish the existing EVA (Economic Value Added) method and introduce new standards that ensure fairness and objectivity. The EVA evaluation method, adopted by many domestic private and public enterprises, assesses profitability by using the amount obtained by subtracting the minimum required return on invested capital from pre-tax profit or operating profit.

Whether the management will accept the union's demands remains uncertain. However, on the same day (the 4th) the letter was received, CEO Park Jung-ho stated at the 'T Service Champion Awards' event held at the T Tower headquarters in Jung-gu, Seoul, "I will communicate directly with members," and urged, "Let us work harder for the company's growth, development, and enhancement of corporate value." Along with this, Park personally announced, "In celebration of the Lunar New Year, we will provide 3 million welfare points (equivalent to 3 million KRW)." However, he drew a line by clarifying that this was an annually given incentive, not an acceptance of the union's complaints.

In response, the union interpreted this as a temporary measure to quell the performance bonus controversy. They also expressed displeasure, rejected the welfare points, and convened the highest meeting, the 'Emergency National Branch Leaders Meeting,' deciding to begin a struggle starting that day.

This content was produced with the assistance of AI translation services.