It has been confirmed that Korea Investment and Securities has strengthened its rules regarding deferred performance bonuses. The company explained that some employees exploited gaps in the payout rules by receiving performance bonuses and then moving to other securities firms.
According to the financial investment industry on the 25th, Korea Investment and Securities recently revised its rules regarding deferred performance bonuses. Deferred performance bonuses are a system that does not pay bonuses at once but distributes them over several years. In the securities industry, where job changes are frequent, the deferred performance bonus system is operated to reduce turnover rates and to prevent excessive short-term profit-seeking.
Until last year, the individual contracts written annually for the beneficiaries of deferred performance bonuses at Korea Investment and Securities included the phrase, "If one changes to a similar industry within 2 years, the remaining deferred performance bonuses will not be paid." This year, Korea Investment and Securities changed this phrase to "Remaining deferred performance bonuses will not be paid upon voluntary resignation."
According to Korea Investment and Securities, many departing employees avoided the provision of "no job changes to similar industries within 2 years" by moving to asset management firms that are not included in the similar industry, while still staying away from Yeouido. These employees continued their securities careers by working at the management firms, receiving remaining performance bonuses from Korea Investment and Securities, and then moving to other securities firms once the two years passed, the company explained.
A representative from Korea Investment and Securities said, "Ultimately, it does not look favorable from the company’s perspective for employees to switch to other securities firms while taking all their performance bonuses with them," adding, "Most other securities firms also use similar wording for 'voluntary resignation,' so we aligned our rules accordingly this time."
There are also voices of discontent among employees of Korea Investment and Securities regarding the sudden change in regulations. One employee said, "There was no adequate explanation in advance about the changes to the contract terms." However, the company stated that it has been explaining the relevant details according to the procedures since last year.