[Column] Dubious bonus party

Kim Hyun-ki

The author is the Tokyo bureau chief and rotating correspondent for the JoongAng Ilbo.

President Yoon Suk Yeol criticized banks for having a bonus binge to celebrate their bumper year off easy interest income with generous incentive payouts to their employees. “Banks have a public role,” the president stressed. What would a number of people with big loan payments feel about bankers indulging themselves with big bonuses during tough times like today.

In reaction, Financial Supervisory Service (FSS) Gov. Lee Bok-hyun promised to look into the bonus and compensation system of commercial banks in Korea. After banks got nervy, the public is appeased somewhat. Bank employees have received 300 to 400 percent of their basic monthly pay as bonuses. They were not the only lucky group of people.

On Tuesday, the Strategy and Finance Committee in the National Assembly discussed a revision to the Special Chip Act aimed to raise the basic tax credit rate for semiconductor facility investments to 15 percent from the current 8 percent. Once the revision is passed, the tax credit rate for new chip facilities rises to 10 percent from 4 percent, which can help chipmakers save up to 35 percent in taxes. President Yoon also has revived the 100-billion-won ($78-million) budget to bolster the chip infrastructure, which was axed by the legislature controlled by the majority Democratic Party (DP). While visiting a wafer line of SK, the president promised to provide all possible support to the semiconductor industry. Most media outlets joined the chorus by trumpeting the need to bolster the declining chip competitiveness of the country. The entire nation supports the chip industry. As semiconductors have become a “public asset,” few would argue against the financial support.

Earlier this month, SK hynix doled out hefty bonuses to its employees amounting to 820 percent of their basic salary. Everyone on the payroll had gotten 41 percent of their annual salary as one-time incentive. For the employees, it will amount to thousands of dollars — and millions for executives. Such bulky bonus checks are unimaginable for most ordinary salary earners. A company needs to share profits with employees after a good year. Samsung Electronics handed out incentives amounting to 1,000 percent of basic salary after the company surpassed its annual performance goal. Financial companies also doled out generous payouts to employees after raking in their best-ever profit from high interest rate.

But SK hynix incurred 1.7 trillion won in operation loss in the fourth quarter, the first three-month deficit in a decade. The company says its bonus this year is actually 18 percent less than what they received a year ago. However, given the declines in its annual operating profit by 45.3 percent and the plunge in its net profit by 74.6 percent, the extraordinary 820 percent bonus certainly looks overboard.

The chip cycle has entered one of its worst downturns. SK hynix explains that the bonus reflects its will to fight the crisis. But many won’t be able to understand the extravagance the company shows despite its poor performance and grim outlooks after it enjoyed all the assistance from the government.

President Yoon Suk Yeol inspects the wafer production line at SK siltron in Gumi, North Gyeongsang, with SK Group Chairman Chey Tae-won, Feb. 1. [JOINT PRESS CORPS]

The U.S. and Japanese governments have been going all-out to support their chipmakers. But the companies have acted differently from ours. Intel stopped giving out its quarterly and annual bonuses. The company cut its CEO’s salary by 25 percent and others’ by 10 to 15 percent to survive the chip down cycle.

Micron and Qualcomm are no exception. Japan’s top flash memory maker Kioxia enjoyed its best-ever results last year, but contained bonuses to the range of 200 to 300 percent. Some could claim that bonuses among Korean chipmakers have been more generous in fear of losing employees to their competitors and in light of high inflation. But U.S. and Japanese chipmakers also face such situations. Rewards must come after that much of efforts.

But common sense is often lost in Korean society, as seen in the acquittal of a former powerful lawmaker from bribery and corruption charges even after his son received a whopping 5 billion won in severance pay after working on his annual salary of 40 million won for couple of years.

The head of the DP even sympathized with — and consoled — a woman lawmaker convicted of using the donations for aged survivors of the wartime sexual slavery for her own beef dinner and shopping. Our top-rated companies, including chipmakers, should be different from the abhorred tribe of politicians.