Conflicts are arising across redevelopment project sites in Seoul's Gangnam area over performance bonuses for union heads. Disputes are intensifying over proposals to pay performance bonuses amounting to several billion won. Union members are calling for intervention from local governments or government ministries to mediate these disputes, but the government's position is that "the distribution of union profits is a private matter," making intervention impossible.

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According to the redevelopment industry on the 24th, the liquidation committee of Gaepo Jugong Complex 2 (Raemian Blestige) has placed the "Settlement of Project Expenses and Decision on Audit (Performance) Bonuses" on the agenda for the upcoming liquidation general meeting on the 29th. The second item on the agenda proposes that 14.5 billion won be paid to union members as liquidation proceeds and that one 84-square-meter apartment, originally intended for general sale but now canceled, be sold and the proceeds paid as performance bonuses to union executives and staff.

The liquidation committee stated, "Serving as project committee member and chair, union auditor and director, union head, liquidation committee member and chair for 25 years, the contributions made toward the successful advancement of the project and maximizing union members' wealth have been significant," adding, "We will sell Unit 3005, Building 212, which was canceled due to the buyer's ineligibility for general sale, in accordance with recommendations from the Ministry of Land, Infrastructure and Transport and relevant laws, and pay the proceeds as audit bonuses to liquidation committee executives and staff."

The 84-square-meter apartment proposed as a performance bonus for the liquidation committee chair and executives is currently listed at between 3.5 billion and 4 billion won. In response, union members have visited the Gangnam District Office to request that the office exercise its oversight authority, arguing that paying out the proceeds from the apartment sale as a performance bonus is excessive.

One union member commented, "There is a crafty strategy at play here, exploiting union members' desire to wrap up the liquidation quickly for their own gain. Furthermore, they bundled unrelated agenda items together, disregarding members' right to a separate vote. Even considering the scale of the project, construction costs, and market price differences, a performance bonus of 4 billion won is excessive."

An official from Gangnam District Office stated, "The district office does not have the authority to supervise the distribution of remaining funds by the liquidation committee. However, we have recommended to the liquidator (former union head) that the agenda items be separated." The official added, "The liquidator maintains that the proposal is legitimate, and it is difficult for the office to judge whether the distribution of assets is right or wrong." The official also said, "We will conduct a legal review as to whether a canceled unit should be resold or incorporated into the union's assets."

Some union members of Raemian One Pentas (formerly Sinbanpo 15th) are also opposing the proposal to pay a performance bonus of 3.8 billion won to the union head. To prevent the payout of a large performance bonus to the union head, union members have filed complaints requesting that the Ministry of Land, Infrastructure and Transport exercise its oversight authority and that the case be referred to the Seocho District Dispute Mediation Committee. The union has put the proposal to pay a 3.8 billion won performance bonus to the union head on the agenda for the general meeting scheduled for the 26th of this month.

Union members oppose the performance bonus payout, pointing out that litigation is ongoing over a 20 billion won compensation claim against Daewoo Engineering & Construction following the termination of a construction contract, as well as a separate lawsuit challenging an additional construction cost payment of 9.9 billion won to Samsung C&T. They believe it is premature to pay the union head a performance bonus, as additional costs may arise in the future. Union members stated, "We do not know ultimately how much the project expenses will increase, and the 'estimated 580 billion won' cited as the union head’s achievement has not even undergone accounting verification." They also emphasized, "The union head initially stated he would not receive a performance bonus, so this issue was not included in the project’s management and disposition plan."

In response, the Ministry of Land, Infrastructure and Transport stated in July last year that "performance bonuses should reasonably be calculated and included in the estimated project expenses in the management and disposition plan once project revenues and expenditures are roughly finalized and profits can be confirmed." However, the ministry also noted that bonus payments to union heads should be overseen by local governments rather than central government. A ministry official explained, "Executive compensation, including bonuses, is determined by the union's articles of association, so it is difficult for the ministry to interpret these details," and added, "Even when we receive complaints, we refer them to the local government."

In the case of Seoul, the city has regulations prohibiting the payment of separate performance bonuses to union executives beyond regular wages and bonuses. However, these rules are only recommendations and are not legally binding. The Seocho District Office also maintains that the matter is not subject to the Dispute Mediation Committee and that internal union conflicts are legal matters to be resolved through the courts. An official from the Seocho District Office stated, "If the proposal is approved at the general meeting, it will be difficult for the district office to impose sanctions other than through legal proceedings." The official added, "It is not feasible for the district office to decide whether or not union assets should be distributed in a certain way. This falls within the private domain."

Kim Yerim, an attorney at Law Firm Simmok, explained, "For items that must be decided at a union general meeting, the clearest approach is to vote down the proposal. However, as administrative agencies lack a legal basis, it is difficult for them to take measures beyond administrative guidance. If the majority of union members are in favor, it is hard to raise an issue, but there have been cases where proposals for performance bonuses amounting to 5 billion or 20 billion won have been voted down."