GlaxoSmithKline(GSK), which tightened its belt after laying off 176 employees last year, actually increased the compensation for its executives (excluding severance pay) 13.5% compared to the previous year.

According to the audit report, which GSK submitted to the Financial Supervisory Service, of the compensation (short-term salary + retirement benefits, etc.) for the company's key executives last year short-term salary accounted for a total of 3,361,049,000 won, which was 399,693,000 won (13.49%) more than in 2014 (2,961,356,000 won).

According to the Korean International Financial Reporting Standards (K-IFRS), the key executives refer to the registered and unregistered executives who have important authority and responsibility in the planning and operational control of business activities. In other words, they refer to the company’s directors.

A short-term salary is the wage expected to be settled within twelve months since the end of the fiscal period. Wages, social security contributions, annual paid leave, paid sick leave, bonuses, etc. excluding severance pay and stock compensation (cash or stocks rewarded based on the value of the company's stocks) fall into this category.

However, while the compensation for director-level executives at GSK increased, the total wage of the company's employees was at a standstill.

The employee benefits recorded in the audit report last year amounted to 117,448,486,000 won, which at first glance, seems like a big increase compared to 2014 (76,152,886,000 won), but given that the increase of retirement consolation benefits (45,389,418,000 won) due to corporate restructuring surpassed the increase of the total employee benefits compared to the previous year, it is difficult to say that employee wages increased.

In other words, since employees received consolation benefits while applying for voluntary retirement, wages appear to have increased, but if we exclude the consolation benefits, wages did not increase.

In fact, a look at the benefits item among the employee benefits, with the exception of severance pay, shows that the total wage of employees after 176 workers were laid off was 58,579,787,000 won, just 0.003% higher than in 2014 (58,577,945,000 won).

Employee welfare benefits decreased by about 300,000,000 won from 6,507,735,000 won in 2014 to 6,209,795,000 won in 2015.

GSK spent 5,167,667,000 won (273,204,000 won in 2014) on retirement benefits (lump-sum retirement allowance, retirement pension, etc.) for key executives last year.
Meanwhile, operating profits decreased during the same period.

In 2015, the operating profit of GSK was -9,298,000,000 won, the lowest of the top thirteen multinational pharmaceutical companies (based on sales) for two years (-17,231,000,000 won in 2014).

Among the multinational pharmaceutical companies recording the biggest sales, companies that suffered losses last year were GSK (-9,298,000,000 won), followed by Merck Korea (-9,126,000,000 won), Roche Korea (-2,723,000,000 won), and Pfizer Korea (-2,539,000,000 won).

hwz@docdocdoc.co.kr

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