An increasing number of companies are adopting Restricted Stock Units (RSUs), which grant company shares to executives and employees as performance rewards under certain conditions. This trend is driven by the advantages of long-term performance measurement and the ability to utilize treasury stock. With the third amendment to the Commercial Act, which mandates the cancellation of treasury shares, passing the National Assembly on February 25, the introduction of RSUs is expected to accelerate. However, experts note that RSUs carry risks of disputes related to payment and taxation, and anticipate that conflicts surrounding them will also increase.
"As usage increases, so will lawsuits"
Kim Jipyung, attorney at Kim & Chang (Judicial Research and Training Institute, 33rd class), predicted, "As the utilization of RSUs increases, lawsuits will naturally rise as well." He explained that not only non-payment but also overpayment could lead to disputes. There are already cases in Korea. In November 2025, over 2,600 unionized employees of Hanwha Ocean filed a suit (2025Gahap41044) seeking payment of RSUs against the company. The case is being handled by the Civil Division 9-3 of the Busan District Court.
Choi Seunghwan (39th class), attorney at Barun Law LLC, commented, "There may be disputes regarding the payment of RSUs to non-registered executives." While registered executives receive annual shareholder meeting approval for their compensation limits, non-registered executives do not. Choi added, "According to the amended Commercial Act, a plan for the disposal and retention of treasury stock must be prepared and approved at the shareholders' meeting. Depending on how specifically the law interprets the required details of this plan, the payment of RSUs to non-registered executives may also require shareholders' approval."
Jang Changsoo (12th bar exam), attorney at DLG Law LLC, explained, "Lawsuits between companies and employees regarding failure to meet RSU conditions will increase. Depending on the RSU contract, there may also be a rise in requests for tax adjustment." A tax adjustment request refers to an action where a taxpayer, after the correction period has passed, asks for the correction of overpaid tax amounts.
Potential Issues with Recognition as Wages
Some predict that disputes may also arise over whether RSUs should be recognized as wages. This view considers the recent Supreme Court decision recognizing Samsung Electronics' target incentive as wages, which has highlighted the issue of performance-based compensation being classified as wages. Experts noted that, since the conditions for granting RSUs differ by company, each case needs to be examined individually. The target incentive is a performance bonus paid based on evaluating whether a business division has achieved its goals, rated from grade A to D. The Supreme Court ruled that the target incentive "is closer to a post-settlement of work performance than to a post-distribution of management performance."
Reporter Lee Sangwoo, The Law Times
※This article is based on content supplied by Law Times.
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