Despite the Boom, '16th in Business Rankings' Tightens Belt... Emergency Management Spreads Across All Fronts

Tension Spreads Across Business Circles
'You Must Respond to Crises When Things Are Going Well'

Golf Bans and Overseas Business Trip Restrictions
Samsung, SK, LG Also Cut Director Compensation Limits

LS Group is receiving the most attention in the era of artificial intelligence (AI). This is because its main businesses, electric wires and transformers, are booming due to the surge in power demand. As LS chose to tighten its belt despite the business boom, the business community evaluates this as a clear demonstration of companies' determination to respond to crises while doing well. LS ranks 16th in the business community hierarchy. There is also an interpretation that the 'ultra-alert mode' is a signal spreading not only among top-tier companies like Samsung and SK but throughout the entire business community.

Initially, when Samsung officially announced the 'six-day workweek for executives,' the prevailing assessment was that its impact on other companies would not be significant. Previously, after Choi Chang-won took office as chairman of the SK Supex Council, Saturday meetings were revived, and some affiliate presidents went to work, but as a culture emphasizing work-life balance (WLB) took root, weekend attendance by executives did not spread to other companies. Despite the policy that employees should not come to work, there was rather much criticism that it was "going against the times."

Instead, companies are injecting tension into their organizations through cost-cutting. This is strongly characterized by the desire to prepare in advance, as the business environment can become difficult at any time. LS Group is no exception for the same reason. A group official explained the background for starting cost-cutting, saying, "Except for some affiliates like Electric and Electric Wire, the performance is not good."

This atmosphere is also appearing in other companies. Among domestic battery companies, SK On, which was the only one to post a loss last year, is running a campaign to fly economy class on business trips. SK Telecom has issued a ban on executives using corporate cards for golf, and Emart, which posted its first-ever loss last year, also took measures to ban golf paid for by the company. Lotte Holdings also issued a circular titled 'Compliance with Basic Work Guidelines,' imposing a ban on weekday golf for all employees and a restraint on overseas business trips including weekends.

The momentum division of Hanwha Corporation, the holding company of Hanwha Group, declared emergency management internally and is cutting costs by not attending overseas exhibitions. It did not attend the 'International Battery Seminar & Exhibit 2024' held in the U.S. last March. This was due to a 30% cut in selling and administrative expenses (S&A) compared to the original plan.

Under the leadership of Chairman Jang In-hwa, POSCO Group decided to reduce executive salaries by up to 20% and abolish the stock compensation system (stock grants) for employees.

Samsung, SK, and LG Groups have all cut the director compensation limits mainly in their core affiliates. Samsung Electronics reduced the total director compensation limit from KRW 48 billion last year to KRW 43 billion this year. In SK Group, SK Inc. cut it from KRW 22 billion to KRW 18 billion, and SK Telecom and SK Square each reduced their director compensation limits from KRW 12 billion to KRW 10 billion. LG Corporation, whose CEO is Koo Kwang-mo, also slightly reduced the limit from KRW 18 billion last year to KRW 17 billion this year, and LG Electronics from KRW 9 billion to KRW 8 billion.

A business community official explained, "In fact, the effect of emergency management measures such as weekend attendance is uncertain," adding, "Companies emphasize cost-cutting as a way to internally share the fact that the economy is difficult and to strengthen the sense of crisis."