Police investigate Samsung, SK Hynix CEOs over shareholder complaint on bonuses

South Korean police are investigating the CEOs of Samsung Electronics and SK Hynix following a complaint filed by a shareholder advocacy group. The Korea Corporate Governance Improvement Committee (KCGIC) has accused the executives of illegally including performance-based bonuses in collective bargaining negotiations, which they argue constitutes a breach of trust and a violation of corporate law.

The KCGIC filed the complaint with the Gyeonggi Nambu Provincial Police Agency, alleging that the inclusion of performance bonuses, which are typically tied to pre-tax operating profit, in labor negotiations is unlawful. The group contends that such bonuses should not be subject to labor disputes and that their inclusion represents an improper outflow of company funds, which should require shareholder approval.

According to the complaint, the executives' agreement to the union's demands regarding performance bonuses amounts to embezzlement. The KCGIC asserts that the annual benefits of trillions of won resulting from these agreements exceed the threshold for aggravated punishment under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

The investigation, which has been assigned to the Anti-Corruption and Economic Crimes Investigation Unit, will examine whether the executives' decisions to include performance bonuses in negotiations were indeed illegal and constituted a breach of their fiduciary duties to the companies and their shareholders. The KCGIC has stated that the executives' actions led to the outflow of company assets, a claim that forms the basis of the embezzlement charges.