[Business & Issues] "My neighbor buys Chanel bags with bonuses, but I only get lipstick?"

⑧Performance Bonuses Widen the Gap Between Rich and Poor

"My husband says he'll buy me a luxury handbag if he gets a performance bonus. Please choose one from these."

"I'm considering changing jobs because there are no performance bonuses or welfare benefits."

2024 Performance Bonus List. On online communities, following 2022 and 2023, the lineup of performance bonuses for large corporations has started again in line with the 2024 performance bonus season. Each company applies different performance bonus standards such as 50% of annual salary, 500% of base pay, or 500% of monthly salary, and the performance bonus list is organized in great detail and updated in real time, showing high engagement from office workers. It is somewhat fortunate if the name of the company you are currently working for appears on the performance bonus list. Small and medium-sized enterprises are envious of the large corporations' performance bonus festivities, living in an era of "the rich get richer, the poor get poorer."

The Semiconductor Performance Bonus Reversal Compared to Last Year

1Q 4.58 trillion KRW, 2Q 4.36 trillion KRW, 3Q 3.75 trillion KRW, 4Q 2.18 trillion KRW. Samsung Electronics' semiconductor (DS) division employees, who recorded losses every quarter last year and never made a profit, did not receive any excess profit incentive (OPI) at the end of last month. This contrasts with last year around this time when they received 50% of their annual salary as a performance bonus. OPI is Samsung Electronics' representative performance bonus system, paid once a year up to 50% of an individual's annual salary when the affiliated business unit exceeds its performance targets.

They also missed out on another performance bonus item, the Target Achievement Incentive (TAI). TAI is paid twice a year, once each in the first and second half, up to 100% of the monthly base salary. Last year's second half semiconductor division TAI payment rate was 12.5% on average, half of the first half's 25%, and the foundry and system LSI divisions had a TAI payment rate of 0%.

On the other hand, SK Hynix, despite also posting an annual loss like Samsung Electronics, managed to turn a profit in the fourth quarter and was able to receive a small performance bonus. On the 26th of last month, the company paid employees a productivity incentive (PI) of 50% (50% of base pay) for achieving production targets semiannually, a 2 million KRW encouragement bonus, and 15 shares of company stock. Last year, due to losses, they did not receive a proper performance bonus. In the first half, they received only a 1.2 million KRW encouragement bonus without PI, and in the second half, only a 50% PI.

Hyundai Motor's High Expectations for Special Performance Bonuses Amid Record-Breaking Results

Hyundai Motor, which recorded a record-breaking operating profit exceeding 15 trillion KRW last year, is a representative company expected to offer substantial special performance bonuses this year. Last year, Hyundai Motor's regular employees received not only a significant salary increase but also a special performance bonus worth 6 million KRW, including 4 million KRW in cash and company stock. Expectations are high that this year's special performance bonus will exceed that amount, with talks suggesting it could reach up to 60% of the annual salary. The Hyundai Motor labor union is demanding special performance bonuses from management in line with the historic performance results.

Conversely, the battery-related industry will receive thinner performance bonus envelopes compared to last year. LG Energy Solution, despite recording record-high results last year, excluded the Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) from the performance measurement indicators, shrinking the performance bonus to about 340-380% of base pay. This is about half of last year's payment rate (870%). The company stated, "Management performance bonuses are determined comprehensively considering sales, operating profit, and other management results," and "the U.S. IRA tax credit is volatile and temporary, so it was excluded from the performance indicators when setting targets." LG Chem's advanced materials division, which produces cathode materials, contrasts last year's 735% of base pay with only about 130% this year.

Samsung SDI pays performance bonuses differently by division, such as battery and electronic materials. The electronic materials division, which was about 37-39% of annual salary last year, cut its OPI drastically to about 18% this year. SK On, which continues to post losses, is unlikely to pay performance bonuses this year as well. SK On's new CEO, Lee Seok-hee, has pledged to voluntarily return 20% of his salary until the company achieves profitability, tightening the belt.

Refining companies such as S-Oil, Hyundai Oilbank, SK Innovation, and GS Caltex, which received performance bonuses in the thousands of percent of base pay last year, are facing sharply reduced performance bonuses this year due to weak refining margins and poor results. Since their performance has dropped to about half of 2022 levels, it is widely expected that performance bonuses linked to results will also struggle to exceed half of last year's levels.

Financial Industry with Generous Severance Pay Also Offers Performance Bonuses Around 200% of Base Pay

Banks, where voluntary retirement can yield an average of 500 million KRW, also offer relatively high performance bonuses compared to other industries. This year, performance bonuses are set at around 200% of base or regular wages. The average annual salary of employees at major banks all exceeds 100 million KRW. Hana Bank pays a special profit-linked performance bonus of 280% of base pay, Kookmin Bank pays 230% of regular wages, Shinhan Bank pays 281% of base pay, NH Nonghyup Bank pays 200% of regular wages plus an additional 3 million KRW.

However, considering the record-high bank sector results, performance bonuses should have increased compared to last year, but the government and financial authorities criticized the banks' "interest business money feast," leading to a slight reduction in this year's performance bonuses compared to last year. Conversely, the insurance industry plans to pay more performance bonuses than last year. Samsung Fire & Marine Insurance offers up to 50% of annual salary (47% last year), Samsung Life Insurance 29% (23% last year), Mirae Asset Life Insurance is considering 100% of monthly salary, and Meritz Fire & Marine Insurance is considering about 60% of annual salary.

The airline industry, excluding Asiana Airlines which is undergoing merger procedures, is considering performance bonuses ranging from 100% to 200% of base pay. This is due to stable oil prices and exchange rates, and pent-up travel demand from the COVID-19 pandemic bursting all at once, leading to good performance in the airline industry.

The pharmaceutical and bio sectors have Samsung Biologics as the highest-paid company with generous bonuses. Samsung Biologics paid 50% of annual salary as OPI last year following record-high results. The company also paid the maximum TAI last year, which is paid twice a year based on performance, up to 100% of monthly base pay.

Performance Bonus Battles Heighten Relative Deprivation Ahead of Lunar New Year Holidays

The disclosure of company-specific performance bonus details ahead of the Lunar New Year holidays is stirring up office workers. "I wish my bank account would be filled with money just like in February when year-end tax refunds, performance bonuses, and holiday 'gift money' overlap," "I'm thinking about how to use my performance bonus," "I bought a car and paid off loans with my performance bonus," "My husband told me to pick a luxury handbag if he gets a performance bonus," and many others are happily contemplating their bonuses this February.

On the other hand, office workers who can only watch the performance bonus festivities from the sidelines suffer from relative deprivation to the extent that they are determined to change jobs to companies offering better welfare and pay than their current employers. Some companies' internal bulletin boards are boiling with complaints about performance bonuses, causing executives to sweat. LG Energy Solution and Samsung Electronics Semiconductor are representative cases. When employee backlash over LG Energy Solution's performance bonus calculation method intensified, CFO Lee Chang-sil personally explained the situation, and President Kim Dong-myung also sent explanatory emails to employees to calm the situation. Samsung Electronics is also facing criticism directed at President Kyung Kye-hyun as the 'total compensation superiority' policy promising the best treatment in the industry to semiconductor employees has not been realized.

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