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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] LG Electronics has decided to reduce its board compensation cap by 10 billion won this year, marking the second cut in two years amid a challenging business environment.
According to filings with South Korea’s Financial Supervisory Service on Thursday, LG Electronics plans to set its board compensation limit at 70 billion won and submit the proposal for approval at its annual shareholders’ meeting scheduled for March 23.
LG Electronics maintained a compensation cap of 90 billion won from 2018 to 2023 before lowering it to 80 billion won in 2024. After keeping the cap unchanged last year, the company has opted for another reduction this year.
Board compensation limits are set by the board after considering recent financial performance and internal and external business conditions, and are subject to shareholder approval. Actual payouts are determined within the approved cap.
The decision comes after LG Electronics reported a 27.5% year-on-year decline in consolidated operating profit last year, driven by weakened global demand for home appliances and TVs, intensified competition, and additional pressure from U.S.-related tariffs. In the fourth quarter, the company posted an operating loss of 109 billion won, partly due to one-off costs associated with voluntary retirement programs.
In contrast, companies expecting record earnings this year—including Samsung Electronics and Samsung Electro-Mechanics—have raised their board compensation caps, highlighting a widening divergence in executive pay policies based on corporate performance.
Meanwhile, Samsung SDI, which swung to a loss last year, has also reduced its board compensation cap for the second consecutive year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
