Shareholders group files breach-of-trust complaints against SK hynix board, union over bonuses

A shareholders advocacy group has filed a series of breach-of-trust complaints targeting the boards and unions of Samsung Electronics and SK hynix, extending earlier complaints against the two companies' chief executives over what it calls excessive performance bonuses.

The Korea Shareholders Movement Headquarters said Tuesday it filed a complaint with the Korean National Police Agency's National Investigation Headquarters against all members of SK hynix's board of directors and the union's executive leadership on breach-of-trust charges.

The group said it filed the additional complaint because SK hynix's management and union "have repeatedly carried out an unlawful agreement despite the Ministry of Employment and Labor's implementation guidelines issued on Sept. 3."

The Ministry of Employment and Labor had previously stated that a demand for a fixed percentage of operating profit as a performance bonus does not constitute a mandatory subject of bargaining or a legitimate basis for mediation or industrial action — though voluntary negotiations between labor and management remain permissible.

The group, however, has maintained that tying performance bonuses to a predetermined share of pre-tax operating profit and distributing them accordingly is unlawful.

Its position is that the distribution of company profits is a matter requiring a shareholder vote and therefore cannot be subject to voluntary labor-management bargaining.

Earlier, the group submitted complaints to the National Investigation Headquarters in August against Samsung Electronics co-CEOs Jeon Young-hyun and Roh Tae-moon and SK hynix CEO Kwak Noh-jung, alleging they had failed to adequately review labor-management agreements on performance bonuses. That case was assigned to the Gyeonggi Province Southern Police Agency.

At a press conference at the time, Korea Shareholders Movement Headquarters head Min Kyung-kwon said that "paying a fixed percentage of operating profit as a performance bonus without a shareholder vote constitutes a drain on company assets with no legal basis."

Min argued that "performance bonuses tied to a company's profit and loss are not wages in return for labor but a retrospective distribution of business results," adding that "the disposition of profits must go through a shareholder vote within the limits of distributable earnings under the Commercial Act."

Earlier this month, the group also filed complaints against all members of Samsung Electronics' board of directors and the executive leadership of the Samsung Electronics chapter of the Samsung Group's cross-company labor union.

The group argued that board members — both inside and outside directors — acted unlawfully by approving a profit-distribution matter that should have been put to a shareholder vote.

Regarding the union leadership, the group alleged that it "actively participated in the CEO's breach of duty by designing an agreement structured around a fixed percentage of operating profit with no cap, and by pushing through performance bonuses — which are not a legitimate subject of industrial action — via an unjustified strike."

The group also filed a complaint in July against Employment and Labor Minister Kim Young-hoon with the Corruption Investigation Office for High-ranking Officials on charges of abuse of authority and coercion.

The group contends that despite performance bonuses not being a subject of collective bargaining, Kim failed to restrain Samsung Electronics' threatened strike in May and instead steered the parties toward a tentative labor-management agreement.