Hanwha is adopting stock compensation planHanwha has adopted stock-based employee compensation in place of cash bonuses.
The company announced in a public filing Wednesday that it will offer restricted stock units (RSU) for its CEOs and top executives. Hanwha has acquired 4.1 billion won ($3.5 million) of its own shares for the plan.
Restricted stock units are a form of compensation that gives employees the right to acquire shares at zero cost on a distribution schedule, on the condition that he or she meets certain performance standards. Stock options, on the other hand, give them the right to purchase shares at a fixed price. RSUs are frequently offered by Silicon Valley companies, like Google and Apple, as bonuses or severance pay.
Hanwha is the first large Korean company to adopt the system. Hanwha Group is Korea’s seventh-largest chaebol by assets.
Hanwha said in the public filing that the distribution is scheduled for January 2027 and January 2030. Hanwha’s current CEOs will receive shares in 2030 and other senior executives in 2027.
The board will decide which executives are to be on the beneficiary list. Once their names are added, Hanwha shares will be distributed on the date, regardless of whether they are retired at that point or not. A top executive in Korea’s top 10 chaebol typically works an average of five to six years in a senior position.
Hanwha’s adoption of the RSU was first suggested by the company’s business support team headed by Vice Chairman Keum Choon-soo. The relevant division was established in 2018 after the strategy planning office was dismantled.
“Bonus payments have limits in that they push executives to raise short-term results,” said a Hanwha spokesman. “The RSU was introduced with hopes that they would motivate executives to devise plans for the long-term perspective and impose on them a higher sense of responsibility when it comes to company management.”
Hanwha Group companies are considering RSU policies, and their boards will vote on adopting the compensation system.
BY LEE SO-A [email@example.com]