Embattled conglomerate leaders forgo salaries

Hanwha Group Chairman Kim Seung-youn

Hanwha Group Chairman Kim Seung-youn and SK Networks Honorary Chairman Choi Shin-won have joined the trend of Korean conglomerate leaders serving without compensation.

These moves come in the wake of harsh criticism of themselves and their companies, though both conglomerates described the renouncement as an expression of willingness to fulfill social responsibilities.

Starting this month, Kim stopped receiving his salary from Hanwha Solutions, the group's energy unit, where he earned 5 billion won ($3.4 million) in salary last year. The group's other affiliates paid him a combined 20 billion won last year.

His decision comes as Hanwha Solutions has drawn mounting criticism from minority shareholders and politicians after announcing in March a plan to raise 2.4 trillion won through a rights offering. The Financial Supervisory Service's (FSS) rejection of the plan forced the company last month to reduce the size of the capital increase to 1.8 trillion won.

"This demonstrates the chief executive's responsible leadership by contributing to technology investment for future growth and improvement in financial soundness," Hanwha Solutions said in a press release on April 17.

The company pledged to sell assets to offset the reduction. It also held a series of meetings with investors and analysts to explain the necessity of the deal. However, the FSS ordered Hanwha Solutions on Thursday to revise the plan once again.

"We will carefully consider shareholder and media feedback on our rights offering and satisfy the request to correct our filing," Hanwha Solutions said.

SK Networks Honorary Chairman Choi Shin-won speaks during an event in Seoul, Nov. 3, 2023. Newsis

Meanwhile, Choi renounced his wages after facing harsh criticism over his return to SK Networks on April 3. He was able to rejoin the trading firm after President Lee Jae Myung granted him a special presidential pardon last August, following a prison term for embezzlement.

"His comeback cannot avoid criticism as it contradicts shareholder and market expectations for enhanced compliance and improved corporate governance at SK Networks," shareholder activist group Solidarity for Economic Reform said in a statement on April 7.

A prospectus of SK Networks revealed on April 16 that one of its seven board members opposed Choi's reappointment as an executive, while another abstained. The company also acknowledged that the return of the disgraced executive may negatively affect its reputation.

In a press release on April 23, however, SK Networks cited the honorary chairman's intent to serve the company and society as the reason for his rejection of compensation.

"He will focus on supporting the company's growth, advising on building global networks and making social contributions," the trading firm said.

Since Samsung Electronics Executive Chairman Lee Jae-yong stopped receiving a salary from his company in 2017 to take responsibility for the conglomerate's involvement in a political scandal that led to the removal of then-President Park Geun-hye from office, several conglomerate leaders have declared uncompensated management to calm criticism of their companies.

In 2021, SK Group Chairman Chey Tae-won promised to return the wages he had received from SK hynix the previous year after employees of the semiconductor company complained about the size of performance-based bonuses.

Kakao executives renounced their wages in 2022, after the company's shares plunged following some executives' exercise of their stock options.