Dong-A Slammed for Forcing Employees to Purchase Stocks
By Kim Tae-gyu
Staff Reporter
Dong-A Pharmaceutical, the country's foremost drug maker in sales, has come under fire for allegedly using a program to pressure its employees to use their salaries to buy the company's stocks.
The company launched the program in 2007 in the aftermath of the management rights feud involving Dong-A Chairman Kang Shin-ho, the former leader of the Federation of Korean Industries, and his sons.
Approximately 90 percent of its 2,200-plus employees are partaking in the program, paying about 500,000 won every month on average. Some pay almost 1 million won depending on their salaries.
On the surface, the program seems to be good because companies support as much money as workers pay to buy the stocks.
However, some claim that they were almost forced to participate in the scheme.
``After the management struggle, we had no choice but to accept the program. It is pretty burdensome to pay 500,000 won a month while I am struggling to pay for my kids' schooling and pay off my debts,'' a Dong-A insider told Yonhap News Agency.
In response, the company said that participation in the initiative is voluntary.
``The firm offers generous incentives for those who take part in the stock-purchase initiative. Plus, share prices have substantially risen over the past few years. Hence, our staff members love it by and large,'' a Dong-A spokesman said.
``In addition, the program received an award from the government late last year. I don't know why some attempt to negatively take issue with the widely lauded project.''
The Ministry of Labor gave an award to Dong-A praising the entity for successfully achieving management stability through the stock purchases by its workers.
The shares of employees are expected to make Dong-A less vulnerable to corporate raiders because Chairman Kang and his close aides have only a 10.6 percent stake in the entity.
By contrast, its rival Hanmi Pharmaceutical and those close to the firm retain up to a 13 percent stake in Dong-A. This prompted analysts to predict that Hanmi might try to take over the company.
Observers estimate that the employees would have around a 3 percent stake in the company through the share-purchase scheme.
Dong-A was established in 1932 by Kang Choong-hee and surged to the top of the local industry in 1967 to dominate the business thereafter on the strength of its best-selling sports drink Bacchus.
It was headed by Chairman Kang until 2005 and is currently managed by CEO Kim Won-bae.