Onepentas Cooperative Head's 5.8 Billion Won Performance Bonus Approval Passed... "Will File for Suspension of Effect"

Sinbanpo 15th Reconstruction Association Temporary General Meeting
Performance Bonus Payment Proposal Leads 91:73 in Favor
Association Members Divided Over Performance Bonus Payment
Ministry of Land, Infrastructure and Transport: "Payment Should Be Made When Profit Can Be Confirmed"

"There can be no performance bonus while the damages from Daewoo have not yet been paid and the liquidation is not complete." (Female union member in her 60s)

"The union leader estimated the brand value increase profit from the business performance at 100 billion KRW. Why is that the union leader's achievement? It's Samsung's achievement. We have never received accounting from a third party." (Female union member in her 40s)

"Even if the union leader receives a 5.8 billion KRW performance bonus, half of it must be paid in taxes. I think he should be given more than 10 billion KRW." (Male union member in his 60s)

On the 19th, some union members held a banner outside the building before the Shinbanpo 15th Union Extraordinary General Meeting held at Banpo Plaza in Seocho, which read, "Ministry of Land, Infrastructure and Transport, Seocho District Office ignored, self-awarded performance bonus of 5.8 billion KRW, all losses borne by union members."

At the special general meeting of Sinbanpo 15th, reconstructed as 'Raemian One Pentas,' the proposal to pay the union leader a 5.8 billion KRW performance bonus was approved by a margin of 18 votes. Some union members plan to file for a provisional injunction to suspend the effectiveness of the performance bonus payment agenda, arguing that it requires a special resolution with at least two-thirds approval.

On the 19th, at the Sinbanpo 15th union special general meeting held at Banpo Plaza in Seocho-gu, Seoul, agenda items including the union leader’s performance bonus payment, refund payment, and sale of reserved land were presented. The union announced that among the 164 voters participating in the vote on the performance bonus payment agenda, 91 voted in favor and 73 against, passing the motion with a majority vote.

After the vote count was announced, some union members pointed out that the agenda requires a resolution with at least two-thirds approval and that the vote was invalid. Union member A, a delegate, said, "According to Article 8 of the union bylaws and the law, agenda items requiring a special resolution need at least two-thirds approval," adding, "We plan to file a provisional injunction to prohibit the general meeting’s resolution against the union."

"No third-party accounting received" vs "Should be given over 10 billion KRW"

During the approximately two-hour meeting, union members engaged in heated debate over the union leader’s performance bonus payment, with voices raised.

A said, "Although this is an agenda to pay a performance bonus to the union leader personally, there is no mention of when to pay it, and he mentioned the estimated business performance amount of 580 billion KRW himself," explaining, "The performance bonus can be received after liquidation and settlement, so I don’t understand why it is now. It would make sense to decide after liquidation when income and expenses are finalized, but pre-approval and fixing the amount beforehand is inconsistent."

Female union member B in her 40s said, "There is an ongoing damages lawsuit against Daewoo Construction, claiming 30 billion KRW, but it is uncertain whether the damages will be 1 billion KRW or 10 billion KRW, which is also problematic," lamenting, "Without receiving third-party accounting, the union leader is shamelessly boasting about himself."

On the 19th, at the Shinbanpo 15th Union Extraordinary General Meeting held at Banpo Plaza in Banpobon-dong, Seocho-gu, Seoul, the agenda for a 5.8 billion KRW performance bonus payment to the union head was approved.

Union member C, who supports the performance bonus payment, argued, "To be exempt from the reconstruction excess profit recovery tax, the management disposition plan approval must be obtained by December 31, 2017, and it was barely applied for, resulting in an exemption of 220 billion KRW," claiming, "When the first application for the excess profit recovery tax was submitted, the district office did not agree, but union leader Kim Jong-il made efforts by visiting the Seoul city government and others."

Union member D said, "Why be so stingy? Even if you give 5.8 billion KRW, half is tax, so I think he should be given more than 10 billion KRW," adding, "The union leader quit being a lawyer and has been fully committed here for eight years."

Before the meeting, union leader Kim notified union members, "Some of the performance bonus requested by the union leader will be distributed to those who have contributed to the union (directors, delegates, union members)." Regarding this, some union members at the meeting pointed out, "The union leader and other executives have no voting rights because it is a self-dealing transaction." The union leader did not accept this claim and did not restrict voting rights, which is expected to become a point of contention in future injunction procedures.

Union leader: "5.8 billion KRW performance bonus equals 3 billion KRW after tax"

In a message sent to union members, union leader Kim stated, "The 5.8 billion KRW requested this time is about 1% of the business profit of 580 billion KRW. After deducting comprehensive income tax and local income tax and reflecting progressive deductions, the actual after-tax income will be 3 billion KRW."

Kim explained the reason for the performance bonus payment: "After taking office as union leader, I resolved severe division and confusion and concentrated all capabilities, resulting in exemption from the reconstruction excess profit recovery tax, which was considered impossible even by maintenance companies. Even under the current reconstruction excess profit recovery law, if the tax were imposed, it would exceed 220 billion KRW, averaging over 1.1 billion KRW per union member." He also cited achievements such as cost reduction after contract termination with Daewoo Construction, winning a loan lawsuit against Daewoo Construction, additional income from reserved land, and an expansion of approximately 7,646 pyeong in building area.

The business profit presented by the union totals 578.1 billion KRW. The main profits include an estimated 220 billion KRW exemption from the reconstruction excess profit recovery tax and an estimated 210 billion KRW increase in sales revenue. Losses due to the change of construction company are estimated at 15.5 billion KRW (including increased relocation loan interest, estimated litigation costs, increased project interest, and decreased rental income), and increased financial costs are estimated at 18 billion KRW.

Meanwhile, the Ministry of Land, Infrastructure and Transport stated regarding the timing of the union leader’s performance bonus payment, "It would be reasonable to calculate and include it in the estimated maintenance project cost in the management disposition plan at a stage where project income and expenditure are roughly confirmed and profits can be verified."

The ministry explained, "If the union executive’s performance bonus is included in the maintenance project cost before the project profit and loss are confirmed, the estimated maintenance project cost in the management disposition plan will increase, thereby increasing the union members’ contribution scale. Also, if the performance bonus is paid in advance without confirmation and the maintenance project results in no profit or a loss, there is no guarantee for the recovery of the paid performance bonus, which could result in losses for union members."

Raemian One Pentas, which reconstructed Sinbanpo 15th, is an apartment complex in Banpo-dong, Seocho-gu, Seoul, reconstructed from Sinbanpo 15th. It consists of 641 households from 4 basement floors to 35 above-ground floors. 292 units will be sold to the general public, with special supply applications on the 29th and first-priority subscription applications on the 30th. The winners will be announced on the 7th of next month, and the official contracts will be conducted from the 19th to the 21st. General buyers will begin moving in at the end of September. The union plans to hold a management disposition plan amendment general meeting in October to November.