'Massive Deficit' KEPCO Performance Bonus '0'... Power Plant Executives' Bonuses Cut by 50%

2022 Management Evaluation Results
'D Grade' KEPCO, "No Performance Bonus"
Half Performance Bonuses Paid to Executives of KHNP and Five Power Generation Companies

Korea Electric Power Corporation (KEPCO), which recorded a massive deficit last year, will not receive performance bonuses. Six power generation subsidiaries, including Korea Hydro & Nuclear Power (KHNP), Jungbu Power, and Seobu Power, which are closely related to KEPCO's deteriorating financial structure, will have 50% of their executive performance bonuses cut.

According to the '2022 Public Institution Management Performance Evaluation Results' announced by the Ministry of Economy and Finance on the 16th, KEPCO received a D (Unsatisfactory) grade. This is the first time KEPCO has received a D grade.

Management evaluation grades are assigned as Excellent (S), Very Good (A), Good (B), Average (C), Unsatisfactory (D), and Very Unsatisfactory (E). The payment rate of performance bonuses varies according to the grade, and bonuses are only paid to institutions with a grade of Average (C) or higher. KEPCO, which received a D grade this time, will not receive any performance bonuses.

From this year, the weight of financial performance indicators for public enterprises has increased from 10 points to 20 points. Financial performance indicators such as operating profit, debt ratio, project expenditure rate, and general administrative expense management greatly influenced the management evaluation grade. KEPCO's D grade this time reflects its poor financial performance. KEPCO recorded an operating loss of 32.6034 trillion won last year.

KEPCO's deficit is largely due to the inability to raise electricity rates despite the sharp rise in global fuel prices. Regarding this, Choi Sang-dae, Vice Minister of the Ministry of Economy and Finance, said, "The management performance of public institutions involves delays in rate hikes and lack of rate realization, but it can also be seen as a lack of painful efforts by public enterprises," adding, "Giving good evaluations to companies with poor financial management performance does not meet the public's expectations."

Korea Gas Corporation, designated as a financially risky institution last year, received a C grade this time, resulting in a full cut of executive performance bonuses and a 50% cut for grade 1-2 employees. Similarly, the six power generation companies?Jungbu Power, Seobu Power, Nambu Power, Namdong Power, Dongseo Power, and KHNP?also designated as financially risky institutions and closely related to KEPCO's deteriorating financial structure, will have executive performance bonuses cut by 50% and grade 1-2 employees' bonuses cut by 25%.

In particular, the Public Institution Management Committee recommended that KHNP, which recorded a net loss for the current term, have executives first cut 50% of their performance bonuses and then return the remaining balance in full, while executives at Nambu Power are recommended to cut 50% of their bonuses and return half of the remaining balance.

Meanwhile, among the 130 public institutions subject to this evaluation, none received an Excellent (S) grade. The distribution was 19 Very Good (A), 48 Good (B), 45 Average (C), 14 Unsatisfactory (D), and 4 Very Unsatisfactory (E).