The World of Samsung and LG Executives
"There hasn't been a Saturday when I didn't go to work with an executive title. It's the destiny of Samsung executives. However, among executives, Samsung is probably the only place where you can receive bonuses for three years even after retirement. We consider it the greatest welfare." - Executive at Company B within Samsung Group
"Right after the 2024 president and executive personnel appointments were confirmed, I applied for and received the new Apple smartphone, iPhone 15. After LG withdrew from the mobile phone business, not only in electronics but also LG Group affiliates' executives can receive the new Apple smartphone for free." - Executive at Company A within LG Group
The 'flower' of large corporations is the executive at the top of the rank pyramid. Just as a small sprout must endure harsh rain and wind to bloom, starting as a new employee and reaching an executive position in a large corporation is as difficult as picking stars from the sky. Recently, top domestic conglomerates like Samsung and LG, which rank high in the business world, have adopted merit-based personnel principles regardless of gender, age, or nationality, making it increasingly rare to become an executive simply by accumulating years of service. As it has become common to retire as a 'perpetual manager,' the number of vice presidents born in the 1970s and general managers born in the 1980s is also increasing.
As of the end of June this year, Samsung Electronics has only 988 executives (excluding registered executives), which is 0.79% of its total 125,058 employees. In the 2024 regular personnel appointments, only 145 people were newly promoted to executives. LG Electronics has 292 executives, accounting for 0.85% of its total 34,490 employees. Across LG Group, 139 people were promoted in the 2024 regular personnel appointments. Since there are retirees as well as new executive promotions, both Samsung and LG have executives comprising less than 1% of their total workforce.
The opportunity to become an 'executive,' given to only a few, is exhausting due to repeated overtime and weekend work, but it leads to sweet rewards such as high salaries, company car support, and bonuses even after retirement.
The annual salary of Samsung Electronics executives listed in the business report averages 703 million KRW per person. This is 5.21 times the average annual salary of regular employees, which is 135 million KRW. Samsung Electronics executives start from general manager newly promoted to executive director, then move up to vice president, president, and vice chairman. In the past, there was an executive director rank, but from 2021, the executive director and vice president ranks were merged into a single vice president rank. LG Electronics executives earn an average of 510 million KRW per person, which is less than Samsung. This is 4.47 times the average employee salary of 112 million KRW.
Both Samsung and LG provide company cars to their executives. Most use domestic cars, mainly Hyundai and Kia. At the end of the year during personnel appointments, new car orders flood in, so Hyundai and Kia corporate client managers are said to be the biggest beneficiaries. Both Samsung and LG provide K8 or Grandeur class cars to executive directors, K9 or G80 class to vice presidents, and G90 class or higher to senior vice presidents and above. Because of this, there is a joke that if you visit the parking lots of Samsung and LG, where most employees earn salaries in the hundreds of millions KRW, imported cars like BMW and Mercedes-Benz are for managers, while Grandeur and K9 cars are for executives.
Samsung Electronics executives receive the company's flagship product, the latest Galaxy phone. Nowadays, if four people gather, two of them often have foldable phones, but when the first foldable phone was released in 2019, Samsung executives were the first to receive this 'rare item,' attracting attention from people who wanted to see the folding phone at various gatherings.
After LG Electronics withdrew from the smartphone business in 2021, it could no longer provide Samsung Electronics products to its executives. Instead, it provides the latest Apple smartphones, as Apple is a client of LG Display, LG Innotek, and others. Usually, right after the regular LG Group executive personnel appointments in November, the first thing executives do is apply for the newly released Apple smartphone.
Executives continue to receive benefits even after retirement.
The biggest benefit for retired Samsung Electronics executives is the 'bonus' they can receive for three years after retirement. Samsung Electronics executives are the only ones in Korea who receive bonuses after retirement. Despite Samsung Electronics' performance plummeting due to a 12.7 trillion KRW loss in the semiconductor division in the first to third quarters of this year, retired executives received bonuses calculated based on past strong performance.
Samsung Electronics has operated a long-term performance compensation system for executives since 2011. It is paid in installments every three years; for example, the performance from 2020 to 2022 is paid in installments over 2023 to 2025 at a fixed percentage. Typically, 50% of the total incentive is paid in the first year of the three-year period, and 25% each in the second and third years. However, this year, the first-year installment rate was set at 33% instead of the usual 50%, and payment was completed by the end of July.
LG provides incentives for one year's performance in the following year, so apart from retired executives receiving compensation as advisors or consultants, there is no bonus they can claim. Instead, retired executives are granted the right to attend the LG Club, where they can gather even without producing any particular achievements. Although no company car is provided, they receive a salary that allows them to maintain dignity. Since there are no assigned missions, they can receive a salary without performance, and commuting is not mandatory, so they do not have to come to the office.
However, recently, due to uncertainty in the business environment and a cost-cutting atmosphere, large corporations that operated some of the best retirement programs in Korea are considering reducing related programs. The most expensive retirement program at Samsung is the 'full-time advisor' position applied to retired executives at the president level or higher. This position pays 70-80% of the salary during their tenure for up to five years and provides an office, secretary, car, driver, corporate card, and golf club membership, making it costly. This is why there have been talks about revising the full-time advisor system whenever the company's performance worsens.
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