[Edaily Reporter kim mi-kyung ] It has been revealed that executive compensation at some food companies—which raised product prices due to high inflation, sluggish domestic demand, and rising production costs—has increased compared to last year. While these companies have improved their performance based on growth in overseas operations, consumers are taking a dim view of the fact that they raised product prices domestically and also increased executive compensation. However, some point out that since price hikes and increases in executive compensation are determined by factors such as business performance and compensation systems, it is difficult to view the two as having a direct causal relationship.

According to the semi-annual reports of major food companies disclosed on the Financial Supervisory Service’s Electronic Disclosure System (DART) on the 16th, compensation for key executives at companies that raised prices in the first half of this year—including Nongshim, OTOKI, and Pulmuone Corporate—as well as at companies like Binggrae, ORION, and SamyangFoods, increased in the first half of this year.

Nongshim(004370) Chairman Shin Dong-won received a total of 1.45 billion won from Nongshim and NongshimHoldings in the first half of this year. This represents a 3.4% increase compared to the same period last year. Ottogi(007310) Chairman Ham Young-jun received 540 million won in compensation for the first half of the year, a 5.9% increase from the first half of last year.

Pulmuone Corporate(017810) CEO Lee Woo-bong received 528 million won. Since his compensation for the first half of last year was less than 500 million won and therefore not subject to disclosure, it is difficult to verify the exact year-over-year change. Notably, Pulmuone Corporate has implemented a voluntary retirement program this year as part of efforts to cut costs and improve operational efficiency. Pulmuone Corporate explained, “This voluntary retirement program is intended to proactively respond to the rapidly changing external business environment and shifts in the industrial structure, and to reorganize our organizational and workforce management in a more efficient and future-oriented manner from a mid- to long-term perspective, thereby securing sustainable competitiveness.”

In contrast, CJ Group Chairman Lee Jay-Hyun CJ CheilJedang Corp(097950)received 1.959 billion won in compensation for the first half of the year, the same amount as last year. Last month, CJ CheilJedang Corp raised prices by an average of 8% on 27 products across eight categories, including Hapban rice, dumplings, and grilled fish.

Even at companies that have frozen prices for major products this year, executive compensation has risen. Binggrae(005180) Chairman Kim Ho-yeon’s first-half compensation increased by 8.6% from 2.212 billion won last year to 2.402 billion won this year. Orion Chairman Dam Cheol-gon and Vice Chairwoman Lee Hwa-kyung received 2.153 billion won and 1.674 billion won, respectively, from ORION and ORION Holdings in the first half of this year. Their combined compensation totaled 3.827 billion won, a 12.8% increase from the first half of last year.

SamyangFoods(003230) Chairman Kim Jeong-su received 894.17 million won in the first half of this year, a 17.2% increase compared to the same period last year. Analysts attribute the increase in Chairman Kim’s compensation largely to a salary adjustment resulting from his promotion. Chairman Kim received a monthly salary of 133.33 million won from January through May of this year, but his monthly salary rose to 225 million won after he was promoted from vice chairman to chairman in June. This represents an increase of approximately 69% in his monthly salary since assuming the chairmanship.

SamyangFoods explained, “We currently have no plans to raise prices,” adding, “We intend to secure profitability by continuously expanding our high proportion of overseas sales, which reached 82% in the first quarter. Regarding cost pressures, we plan to respond appropriately by improving production efficiency and optimizing our channel mix rather than through additional price adjustments.”

Industry observers note that since price hikes and increases in executive compensation are determined separately by cost pressures and management performance, respectively—as well as by compensation systems—it is difficult to view the two factors as having a direct causal relationship. However, as some companies are raising prices or streamlining operations citing a deteriorating business environment, while simultaneously increasing executive compensation, consumers are expected to become even more critical of corporate cost burdens and profit distribution.

The Korea Consumer Organizations Federation recently commented on the recent food price hikes, stating, “We are highly skeptical that these decisions were made as a preemptive response to anticipated future cost increases or to secure profitability, rather than in response to current cost burdens.” The federation added, “In particular, given that price hikes were implemented for products with high market share, we are concerned that this may have been a case of price-setting that exploited market dominance.”