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Biz News Korea(Eng)

LS Group scraps RSU system a year after its introduction

Collected: 2024.03.25

Distributed: 2024.03.26

Source: Go Direct

[Courtesy of LS]

LS Group has decided to abolish the Restricted Stock Unit (RSU) system introduced in 2023 and revert to its previous performance bonus system. The decision appears to be influenced by growing dissatisfaction with a relatively long wait for compensation, as well as increasing regulatory pressure thanks to the recent trends towards mandatory disclosure of RSU plans.

According to sources on Sunday, LS Corporation and other major LS Group subsidiaries are scheduled to convene a board meeting on March 28th,2024, to decide on the abolition of the RSU system.

RSUs differ from stock options, which focus on cash payments or short-term performance, by providing rewards linked to the company‘s stock price that range from as little as three years to as long as ten years. This system is believed to prevent an excessive focus on short-term performance. Several companies, including Apple Inc., Google LLC, Meta, and Amazon in the United States, have adopted similar plans ever since Microsoft introduced RSUs in 2003.

“There have been unnecessary misunderstandings regarding our RSU system recently, leading us to revert to the traditional performance bonus system,” an LS Group official said, explaining the rationale behind the abolition.

With the abolition of the RSU system, LS Group will return to the conventional method of cash-based performance rewards.

By Cho Yun-hee and Minu Kim

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