SK On will freeze C-suite salaries until it is profitable

Industry

Published: 01 Jul. 2024, 16:34

SK On will freeze C-suite salaries until it is profitable

SK On CEO Lee Seok-hee at InterBattery 2024 in southern Seoul in March. [NEWS1]

SK On will freeze the salary of its executives until the battery maker turns a profit, the company said Monday in a bid to tackle lingering financial distress.

The new policy, announced by SK On CEO Lee Seok-hee under its “emergency management system,” also includes the abolition of a few C-suite executive positions including those of chief administrative officer and chief commercial officer (CCO).

The board will hold the right to appoint C-suite executives, including the CEO, to allow for “flexible changes” in response to continued underperformance.

“Executives and leaders will lead by example with heavy responsibility on the crisis, which could turn to an opportunity for us as a global manufacturing company,” CEO Lee said in a letter to employees Monday. “We have our back against the wall. We should all pull together.”

Heads of Korea's three largest battery makers, in the front row, tour SK On's booth at InterBattery 2024 in southern Seoul in March. [YONHAP]

Certain perks will be reduced. Executives must fly economy on international trips and are now required to be at work by 7 a.m.

SK On has reported losses for 10 consecutive quarters despite having invested more than 20 trillion won ($14.5 billion) over the last three years. It reported 331.5 billion won in operating loss in the first quarter, boosting cumulative losses since its 2021 establishment to 2.6 trillion won.

Samsung Securities estimated that the battery maker would generate another 351.6 billion won in operating loss in the second quarter.

SK On recently dismissed CCO Sung Min-suk. Sung had been in charge of marketing, sales and project management.

The company is continuing to make large-scale investments in North America while EV demand slows globally.

SK On said it expects 7.5 trillion won in capital expenditures this year alone. It is committed to investing $11.4 billion in three new factories in Kentucky and Tennessee through a joint venture with Ford Motor.

The No. 2 Kentucky plant's operation has been delayed as EV demand continues to cool.

BY SARAH CHEA [chea.sarah@joongang.co.kr]