Lotte Chemical, First in Petrochemical Restructuring, Offers Severance Pay at Five Times Base Salary to Ensure Organizational Stability

Lotte Chemical has pledged to provide employees with compensation equal to 500% of their base salary and a 100% employment succession guarantee ahead of its merger with HD Hyundai Chemical. This move is seen as a measure to address uncertainties arising from organizational restructuring and to prevent talent outflow.

Lotte Chemical Daesan Plant. Provided by Lotte Chemical

According to the petrochemical industry on April 13, Lotte Chemical recently held a briefing session regarding the merger with HD Hyundai Chemical and announced a plan to pay a special incentive totaling 500% of the base salary.

The incentive will be distributed by paying 100% prior to the launch of the joint venture, followed by an additional 100% each year for the next four years. This structure is interpreted as a way to prevent mass departures due to one-time compensation and to ensure organizational stability.

The organizational restructuring will proceed in phases. In June, employees will first transfer to the newly established split-off entity tentatively named "Lotte Daesan Petrochemical," and then on September 1, they will be fully integrated into the unified joint venture. The joint venture will be managed under a co-CEO system, with Lotte overseeing sales and Hyundai handling production, rotating responsibilities on a set schedule.

Employment and compensation levels will remain unchanged. Labor relations will be succeeded without any artificial restructuring, and existing salary, benefits, promotion systems, and length of service will all be recognized.

Some adjustments will be made to the working environment. For staff based in Seoul, relocating the office to Dogok-dong, Gangnam-gu is under consideration. Employees at the Daejeon Tech Center will temporarily remain at their current location, but there are discussions about relocating and expanding to a separate research institute in the future.

However, due to differences in evaluation systems, data platforms, welfare programs, and labor union structures between the two companies, complete integration is expected to take time. An industry official commented, "We inevitably have to move from physical integration to system and cultural integration," adding, "The integration task force is currently coordinating major issues."

This merger is part of a business restructuring initiative that includes the consolidation of plants within the Daesan petrochemical complex. The two companies submitted related plans to the government in November last year and have recently formalized their intention to proceed with a physical division and merger, thus accelerating structural reforms.

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