Concentrated Benefits for Some Minority Executives
No Clear Criteria for Differential Distribution Among Employees... Growing Suspicion
K Bank: "Focus on Motivation Over Performance Rewards... Plans to Expand Compensation in the Future"
[Asia Economy Reporter Kim Jin-ho] K-Bank, the first internet-only bank, is embroiled in internal conflict over stock options. The stock options, intended to boost employee morale, have instead sparked a controversy over fairness among employees. The issue arose because the benefits were concentrated on a small number of executives rather than the employees who endured difficult times since the bank’s launch.
According to financial industry sources on the 29th, there are complaints within K-Bank regarding the large-scale stock option grants. The “carrot” designed to motivate employees and foster a sense of community is instead causing feelings of deprivation among some staff.
An anonymous K-Bank employee said, “I feel disappointed and deprived that the benefits are concentrated on executives who have just joined, not on employees who endured tough times. The company explains that stock options were distributed evenly, but in reality, they were allocated unevenly, and no clear criteria have been disclosed.”
Earlier, on the 9th, K-Bank held a board meeting and decided to grant stock options of 2.1 million common shares (exercise price 6,500 KRW) to 320 employees. Stock options are a form of performance reward. They give the right to purchase shares at a predetermined price, allowing the holder to profit if the company’s stock price rises above that price after a certain period.
Internal employees pointed out that most stock options were concentrated among a very small number of executives. Rather than employees who endured difficult times, a few newly joined executives received an excessive share of the benefits. Of the 2.1 million stock options, 850,000 shares were granted to nine executives, including internal director Lee Poong-woo. Most of these nine executives have been in office for less than six months. Including 900,000 shares granted earlier to Bank President Seo Ho-sung, about 60% of the total stock options were concentrated among 10 executives.
There is also much talk internally about the 1.25 million stock options granted to the remaining 311 employees. If distributed evenly, each person should receive 4,000 shares, but many employees report receiving only 1,000 to 1,500 shares, far less than expected. The strict conditions for exercising stock options?such as a mandatory two-year service period, achieving 2 trillion KRW in equity capital, and pre-tax corporate profits exceeding 100 billion KRW?are also controversial.
Some even suspect that the employee portion of stock options was concentrated on specific individuals. An insider said, “To obtain consent for the stock options, executives are conducting one-on-one interviews with employees to get their signatures. Questions about the allocation criteria are being blocked, and an atmosphere is being created where refusal to consent is not possible.”
The stock option allocation plan of the soon-to-launch Toss Bank is also a factor fueling feelings of deprivation among K-Bank employees. Toss Bank plans to grant stock options worth 100 million KRW to all employees at the time of grant after starting operations to secure top talent. Kakao Bank has also granted stock options multiple times to boost employee morale.
Regarding this, K-Bank stated, “This stock option grant focused more on motivation than on past performance rewards. We will establish a performance reward system including stock options so that as many employees as possible can benefit in the future.”
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