(Yonhap Feature) Corporate executives join cost-cutting drive

SEOUL, Jan. 30 (Yonhap) -- In the face of the worst economic downturn in a decade, executives at South Korea's major companies are voluntarily giving up slices of their bonuses and salaries as part of desperate corporate efforts to weather the crisis.

Buffeted by tumbling exports and stubbornly anemic domestic demand, the economy
is headed for its first recession since the 1998 Asian financial crisis, forcing
companies to tighten their belts.
Asia's fourth-largest economy shrank 5.6 percent last quarter from three months
earlier, the first quarterly decline since the first quarter of 1998, and is also
expected to contract in the current quarter.
At the vanguard of corporate cost-cutting efforts are executives at Samsung
Electronics Co., the world's largest memory chip maker and South Korea's biggest
listed company by market value.
Some 800 Samsung executives have volunteered to return 30 percent to all of their
cash incentives for this year in an effort to help the chip behemoth tide over
slumping demand and falling profits.
The voluntary renouncement of benefits, which can reach as high as half of an
executive's annual salary, came on the heels of a 10-20 percent reduction in
yearly pay announced by the company.
"The voluntary bonus return is intended to share the burden of the company's pain
and to boost workers' morale," said Jose Suh, a Samsung spokesman. "It also shows
how dire the company's situation is."
Samsung suffered its first quarterly net loss of 22.2 billion won (US$16.15
million) in the October-December period as the global recession drove down prices
for key products such as semiconductors and liquid crystal displays.
The chip giant is widely expected to fall even deeper into the red this quarter
as the global recession is likely to aggravate a market glut and continue to deal
a blow to its overseas shipments.
Samsung executives are not alone. Top-rung officials of other major companies
have also joined hands in cutting costs by relinquishing part of their pays.
Executives of POSCO, the nation's top steelmaker, have vowed to waive one tenth
of their annual salaries in a show of "determination to share the pain of the
economic crisis."
Top-tier officials at leading carmaker Hyundai Motor Co. and its affiliate Kia
Motors Corp. have also agreed to a 10 percent pay cut to ride out the hardships
stemming from plunging demand at home and abroad.
Some industry watchers hail the cuts in executive bonuses and pay as a positive
step in helping companies ride out the current economic crisis which is widely
seen as worse than a decade ago.
"The executive pay cuts are what must rightfully come as large conglomerates
overcame the economic crisis a decade ago at the sacrifice of workers and thanks
to government support," said Woo Moon-sook, a spokeswoman for the Korean
Confederation of Trade Unions, a progressive umbrella labor organization.
"Company executives should take social responsibility by giving back part of
their excessive income and retaining their workers."
Rank-and-file workers, however, describe the executive pay cuts as a knee-jerk
response to the financial crisis and are calling their efficacy into question.
"My coworkers and I see the executive pay cuts as condescending showmanship and
we are not inspired," said a Samsung Electronics employee who identified himself
only by his surname Jeong.
"Given their enormous salaries and other compensations, the salary reductions are
just a drop in the bucket," Jeong said. "The ordinary workers have taken the
brunt of the crisis."
Han Jin-hee, an economist at the state-run Korea Development Institute, echoes
Jeong's view, saying companies should try to adopt more fundamental measures to
steer themselves out of the business slump.
"Executive pay cuts are not an effective way to overcome a crisis or prop up
faltering corporate earnings," Han said. "Instead, companies should step up
efforts to reorganize their operations at such a time."
pbr@yna.co.kr
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