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[Editorial] No work, no pay
Principle should apply to chaebol families
By 김케빈도현Published : Sept. 5, 2016 - 16:23
Shin Dong-joo, the former vice chairman of Lotte Group, is being investigated by the prosecution for having allegedly embezzled corporate funds.
Shin, the eldest son of Lotte Group founder Shin Kyuk-ho, had been the group’s vice chairman in charge of its affiliates in Japan before he was dismissed from his executive positions by Shin Dong-bin, the Lotte chairman and his younger brother, in early 2015.
The ousted “prince” of the Lotte founder’s family is suspected of having received 40 billion won ($36 million) in stipend from the group’s affiliates in Korea between 2006 and 2015, although he had not been involved in the management of the companies.
He received the money simply because he was a board member of the subsidiaries, which included Hotel Lotte, Lotte Engineering and Construction, and Lotte International.
Saying that he realized belatedly that the money was being paid to him, Shin reportedly argued that the accusation of embezzlement was far-fetched as he had been officially appointed to the boards of the companies.
Yet prosecutors think differently. They believe that receiving a large sum of money in stipend without actually playing the role of a director can be seen as an act of embezzlement.
Shin may feel hard done-by, as there are many chaebol owners and their children who collect hefty paychecks from group affiliates -- although they are not engaged in any work -- simply because they are on the boards of the companies.
For instance, Shin Kyuk-ho, the founder and general chairman of the beleaguered group, received 800 million won in salary from Lotte Shopping in the first half of this year as he is registered as its CEO.
Yet he has not done any work for the company or other affiliates since October last year. The court recently designated a nonprofit organization as his legal guardian, judging that he lacked the ability to make normal business decisions due to illness and old age.
Among chaebol family members, getting paid by group affiliates for doing nothing is a widespread practice. But such an outdated and outrageous practice must be put to an end.
The principle of “no work, no pay” should be applied to chaebol family members. If chaebol children participate in the management of group companies, they have the right to be rewarded for their work.
But if they are not involved in the management of group companies, they should not expect any pay from them. They should be content with receiving dividends on their shareholdings.
Shin, the eldest son of Lotte Group founder Shin Kyuk-ho, had been the group’s vice chairman in charge of its affiliates in Japan before he was dismissed from his executive positions by Shin Dong-bin, the Lotte chairman and his younger brother, in early 2015.
The ousted “prince” of the Lotte founder’s family is suspected of having received 40 billion won ($36 million) in stipend from the group’s affiliates in Korea between 2006 and 2015, although he had not been involved in the management of the companies.
He received the money simply because he was a board member of the subsidiaries, which included Hotel Lotte, Lotte Engineering and Construction, and Lotte International.
Saying that he realized belatedly that the money was being paid to him, Shin reportedly argued that the accusation of embezzlement was far-fetched as he had been officially appointed to the boards of the companies.
Yet prosecutors think differently. They believe that receiving a large sum of money in stipend without actually playing the role of a director can be seen as an act of embezzlement.
Shin may feel hard done-by, as there are many chaebol owners and their children who collect hefty paychecks from group affiliates -- although they are not engaged in any work -- simply because they are on the boards of the companies.
For instance, Shin Kyuk-ho, the founder and general chairman of the beleaguered group, received 800 million won in salary from Lotte Shopping in the first half of this year as he is registered as its CEO.
Yet he has not done any work for the company or other affiliates since October last year. The court recently designated a nonprofit organization as his legal guardian, judging that he lacked the ability to make normal business decisions due to illness and old age.
Among chaebol family members, getting paid by group affiliates for doing nothing is a widespread practice. But such an outdated and outrageous practice must be put to an end.
The principle of “no work, no pay” should be applied to chaebol family members. If chaebol children participate in the management of group companies, they have the right to be rewarded for their work.
But if they are not involved in the management of group companies, they should not expect any pay from them. They should be content with receiving dividends on their shareholdings.
