South Korea’s industry minister said on August 6 that the government is considering requiring shareholder approval for large employee bonuses tied to corporate operating profit, arguing that such payments should not be made without the consent of those who bear the financial risk of owning a company.
Industry Minister Kim Jeong-kwan said compensation systems that automatically allocate a fixed percentage of operating profit to employees often exclude shareholders and investors from decisions that directly affect corporate earnings.
“Shareholders own the company, and investors bear the corresponding risk,” Kim said during a policy forum. “Yet they are often left out of discussions over profit-sharing bonuses.”
Kim said companies that disregard shareholder interests risk undermining investor confidence, ultimately harming both management and employees.
He said he opposes compensation structures that link employee bonuses directly to operating profit unless they receive approval from a company’s board of directors or shareholders.
“Distributing bonuses in ways that conflict with the interests of shareholders and investors exceeds management’s proper authority,” Kim said.
The government is discussing amendments to the Commercial Act and the Capital Markets Act that would require shareholder approval for large bonus payments. Kim argued that corporate earnings should first be directed toward investments that strengthen long-term competitiveness, including capital spending and research and development, before being distributed as compensation.
Kim also addressed the controversy surrounding Coupang, saying reactions in the U.S. vary depending on whether he is speaking with elected officials or trade policymakers.
According to Kim, many U.S. lawmakers mistakenly view Coupang as an important channel for increasing American exports to South Korea and narrowing the bilateral trade deficit. He said those lawmakers are often surprised to learn that many South Korean consumers associate the platform primarily with low-cost imports from China rather than American products.
Kim maintained that the dispute is fundamentally about data security rather than trade.
“The core issue is that personal information relating to nearly 80% of South Korea’s adult population was exposed, and the company failed to disclose the incident for months,” he said.
Kim said he asks U.S. officials how Washington would respond if a foreign company failed to promptly report a data breach involving roughly 80% of American adults.
“Most acknowledge the point,” he said.
He also rejected suggestions that South Korea has discriminated against Coupang because of its U.S. ownership.
“If the Korean government had treated Coupang unfairly simply because it is an American company, it could not have grown this quickly,” Kim said. “This issue is not significant enough to undermine the foundation of the U.S.-South Korea alliance.”
Kim also expressed support for easing restrictions on overnight delivery by large discount retailers, saying regulations should better reflect the country’s shift toward online commerce. He added that any changes should balance greater competitiveness for retailers with continued protections for small businesses and traditional merchants.
