[KEF Wage·HR Research] HCG proposes a shift to long-term equity

In a report contributed to the Korea Enterprises Federation's Wage · HR Research, HCG executive Hong Soon-won points to the limits of cash-centered pay exposed by the semiconductor industry's bonus controversy, and identifies 'long-term equity compensation' tied to enterprise value as an alternative
Cash bonuses lose their retention effect the moment they are paid and linger as a benchmark that reproduces conflict, whereas long-term equity such as RSUs links individual rewards to a company's mid- to long-term performance, creating incentives for longer tenure and higher enterprise value
In practice the center of gravity is shifting from stock options to RSUs, but only 11 companies have performance-linked conditions in place, leaving careful design as the remaining challenge

In a report contributed to the Korea Enterprises Federation's Wage · HR Research, HCG executive Hong Soon-won points to the limits of cash-centered pay exposed by the semiconductor industry's bonus controversy, and identifies 'long-term equity compensation' tied to enterprise value as an alternative
Cash bonuses lose their retention effect the moment they are paid and linger as a benchmark that reproduces conflict, whereas long-term equity such as RSUs links individual rewards to a company's mid- to long-term performance, creating incentives for longer tenure and higher enterprise value
In practice the center of gravity is shifting from stock options to RSUs, but only 11 companies have performance-linked conditions in place, leaving careful design as the remaining challenge

Related Articles