KTF comes under fire for stock incentives

KTF Co., Korea’s second-largest mobile phone operator, has come under fire after the company “secretly” provided cash incentives to its employees when they purchased some of the company’s stock. Between March and April this year, KTF offered a total of 355 million won ($341,000) in incentives to its 487 employees to buy the company’s shares, said Chung Hye-yoon, a KTF spokeswoman. The news was first reported Monday by all-news cable channel YTN. Executives such as former chief executive Nam Joong-soo and current chief executive Cho Young-chu were not eligible for the incentives, she said. Mr. Nam is now the chief executive of KT Corp., the parent of KTF. KTF said yesterday that it had previously provided incentives to the executives, but canceled them because of a possible breach of securities trading laws. Executives and employees of KTF bought 196,680 shares during the purchase period; of the total, executives purchased about 40,000 shares. KTF denied any wrongdoing. “Management can provide incentives to ordinary employees to foster their loyalty to the company,” it said. Although it remains unclear whether it is unlawful to grant incentives to promote an employees’ stock purchases, it may anger retail investors in KTF, some analysts say. “In terms of corporate transparency, there could be a problem because KTF funded their employees’ stock purchases,” Kim Seon-woong, head of the Center for Good Corporate Governance, told YTN.