BGF Retail employees angered by reduced bonuses, increased dividends to owner family

A woman picks up an ordered item at a CU convenience store in Seoul, Jan. 8. Courtesy of BGF Retail

BGF Group Chairman Hong Suk-jo / Screen capture from BGF's website

Employees of BGF Retail, an operator of the country's major convenience franchise CU, have begun mobilizing a protest against the company.

They say the company slashed their bonuses despite its record sales in 2023, according to the industry watchers, Friday.

They also say that, in contrast, the retailer has decided to increase dividends to mainly benefit the group's chairman and his family.

BGF Retail, a BGF Group subsidiary, logged 8.19 trillion won ($6.1 billion) in sales last year, a 7.6 percent increase from the previous year. It recorded an operating profit of 235 million won and a net profit of 195 million won during the same period, a year-on-year increase of 0.3 percent and 1.2 percent, respectively.

Despite the record figures, the bonuses handed to employees last month shrunk by 30 percent in amount compared to last year.

What upset the employees further was how much the group's owner family will receive in dividend payments this year.

The group's chairman, Hong Suk-jo, and his family own 23.37 percent of BGF Retail's shares, and they will receive around 16.6 billion won in dividend payments for their stake in the company, whose per share dividend is set at 4,100 won.

BGF Group retains 30 percent of the company's stock and will receive 21.3 billion won in dividends from the subsidiary.

The family also owns 69.62 percent of BGF Group's shares for which they will receive 8 billion won in dividends after the group's per share dividend was raised from 110 won to 120 for the upcoming dividend payout.

The amount of dividends will be finalized at the upcoming general shareholders' meeting scheduled for next month.

BGF Retail employees unhappy with the amount of their bonuses created an online chat room with 1,170 anonymous participants and started planning a protest with a truck and sound equipment in front of the company's office in Seoul.

The company's CEO Min Seung-bae said, in an email sent out to employees, that the decision to cut bonuses resulted from the firm's underperforming last year compared to the previous year.

However, that didn't stop employees from voicing their dismay.

"We hear from outside the company we made record sales, but inside, the management ironically says we're in a crisis and must tighten our belts," an employee said. "I don't know which story to believe."

Another employee said his colleagues have so far collected 1.8 million won to rent a truck and speakers for the protest. "We've set up the chat room to improve the organization as a whole," he said.

The planned protest comes as employees of LG Energy Solution earlier this month launched a one-person protest against their firm in a similar style in Seoul's Yeouido, where the company's office is located.

A BGF Retail official said the company had to reduce bonuses by a "slight" amount because didn't meet its perfromance goals last year. She added that the company allocates bonuses to its employees equally and shares the calculation of bonuses transparently.

"The volume of BGF Retail's stock dividends is the same as the previous year, while that for BGF Group has been lowered this year," the official said. "We must consider comprehensively the company's profit, investors and cash in possession to decide how to calculate the dividends. And the method applies to all our shareholders equally."