The number of company founders and CEOs who share their wealth with employees is on the rise at home and abroad.
Hanmi Pharmaceutical chairman Lim Sung-ki made headlines last year as he shared corporate success with loyal employees by paying them hefty bonuses.
The average amount given per employee was 45 million won ($36,400), about the same as an average citizen’s annual salary.
In addition to the amount of bonuses given, the 75-year-old chairman continued to surprise the Korean public by donating a partial amount of his own shares to his employees.
Despite his controversial decision to pass on a portion of his shares to his seven grandchildren in their teens last year to reduce their transfer tax liability, his sharing corporate success with employees has garnered himself a positive image mainly because few wealthy CEOs here have made similar moves in the past.
Unlike in Korea where wealth sharing among family members is more common through a variety of methods, many cases can be found abroad.
Sharing profits
U.S. oil and natural gas company Hilcorp founder and CEO Jeffery Hildebrand gave a Christmas bonus of $100,000 to each of his 1,399 employees in December last year.
Hildebrand reasoned that because the company achieved its set yearly goals within eight months, his employees duly earned the bonus.
As oil refineries had an overall rough time with decreasing oil prices, the yearly achievement in a relatively short amount of time especially was deserving of reward.
Hildebrand decided to return the company’s profits to the employees, commonly known as performance-based rewards. While it is not uncommon to see six-digit performance-based rewards given to employees, the rewards are usually doled at in higher ranks.
Different from most company CEOs, Hildebrand made sure that all employees received an equal share of the loot.
Sharing funds raised from corporate sales
When a company decides to sell a subsidiary, employees working at the affiliated company are typically worried about losing their jobs. Therefore, it is common to see the buyer announce they will not go through restructuring in an effort to assure employees while the selling company quietly disappears with the sales profit.
However, U.S. glass manufacturer C.R. Laurence was different. In fact, employees had no need to worry, as founder Donald Friese decided to give $85 million to his employees out of the $1.3 billion he earned from selling the company. Employees who worked for a minimum of one year received a bonus ranging from $5,000 to $1 million to make sure that there would be no financially harmed worker out of the 1,600 employees.
To return part of the profit gained from selling a company to employees is extremely rare, and the particular event received a great deal of media coverage.
Donald Friese said in an interview, “While some are born with a ’silver spoon‘ in their mouths, I was born without a spoon,” expressing his childhood struggles. He added that it was “only fair to share with the employees,” as he would have been unable to meet financial success without them.
Sharing personal salary
Dan Price, CEO of U.S. credit card payment system company Gravity Payments, cut his own salary to raise those of his employees. Unsatisfied with the great disparity caused by income inequality, Price reduced his $1 million salary by 90 percent and raised the salaries of his employees to set the lowest annual salary at $70,000. With this change, the salaries of 30 employees, including janitors, sales clerks and line operators, doubled.
Gravity Payments is a small company, and the amount given up by Price is not much compared to the donations of other CEOs. However, his focus on all his employees, even those who do menial tasks, became the talk of the town.
Being a kind boss may not be the goal of every businessmen, but it sure is something that more people could pursue to boost employee loyalty, market watchers said.
By The Korea Herald Superrich Team (seoyounglee@heraldcorp.com)
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Hong Seung-wan
Cheon Ye-seon
Bae Ji-sook
Yoon Hyun-jon
Min Sang-seek
Lee Seo-young
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