SK Group headquarters in Jongno District, Seoul / Courtesy of SK Group
SK Group has initiated a reduction of executive positions across key affiliates as part of a comprehensive effort to restructure its portfolio to tackle slowdowns in main business areas.
According to industry officials, SK Ecoplant, a construction engineering and waste management affiliate, announced a reshuffle of its top brass last week, resulting in the elimination of 17 executive positions and the promotion of two.
Given that the company had 66 executives as of June this year, according to an audit report, the affiliate has reduced approximately 20 percent of its executive positions over the past four months.
SK Ecoplant has been a primary focus of SK's group-wide restructuring effort due to years of declining profitability.
To address this issue, SK Group appointed Jang Dong-hyun, vice chairman of the conglomerate's holding company SK Corp., as the new CEO of SK Ecoplant. Jang had previously served as CEO of the holding company for six years. In May, SK Ecoplant also appointed Kim Hyung-keun, the former head of the financial team at SK E&S, as co-CEO, prompting speculation that his appointment was aimed at improving the waste management company's financial stability.
SK Ecoplant's latest executive reshuffles are viewed as a sign of broader streamlining efforts within the conglomerate.
According to officials at the group's subsidiaries, significant job reductions among executives are anticipated soon. While SK Group typically conducts executive reshuffles in December, this year's changes may occur earlier to instill a greater sense of urgency among executives, the officials noted.
A banner announcing a shareholder meeting for SK Innovation's merger with SK E&S is displayed at SK Innovation's headquarters in Jongno District, Seoul, Aug. 27. Yonhap
Among the subsidiaries, SK On, the group's struggling battery manufacturing unit, is drawing attention as it has accumulated losses for 11 consecutive quarters due to a prolonged slowdown in electric vehicle demand.
Last month, the company announced a voluntary retirement program for its employees for the first time since 2021. The company promised to offer voluntary retirement applicants 50 percent of their annual salary for six months, along with a short-term incentive. The company also launched an unpaid leave program for those who are applying for academic courses.
SK On is currently pursuing a merger with its cash-generating affiliates, SK Trading International and SK Enterm, to secure financial stability amid weakening EV demand. As part of this process, a reduction in the number of executives at the company is also anticipated.
A number of executives have already left the company.
From July to August, four senior executives, including those responsible for global alliances and corporate culture, departed from the company, according to SK On's audit report.
SK Telecom, the telecommunications unit, recently increased its retirement incentive from 50 million won to a maximum 300 million won to encourage the voluntary retirement of employees aged over 50. Additionally, SK Keyfoundry, a subsidiary of SK Hynix, launched a voluntary retirement program for the first time in the company's history.
“Given that the group is undertaking comprehensive efforts to rebalance its overall structure, changes in the number of executives may be unavoidable,” said an official at an SK affiliate. “However, it remains uncertain how significant the reshuffle will be, as there are no established standards or principles guiding this process.”
SK Group Chairman Chey Tae-won speaks during the group's 2023 CEO Seminar in Paris, Oct. 18, 2023. Courtesy of SK Group
Against this backdrop, the conglomerate is also intensifying efforts to reorganize its business portfolio. In addition to SK On's merger with two affiliates, the group aims to maximize efficiency through the merger of its petrochemical unit, SK Innovation, with the gas subsidiary, SK E&S.
Last month, the group also designated private equity investment firm Hahn & Company as the preferred bidder for a full stake in its materials unit, SK Specialty, while divesting its 270 billion won stake in WinCommerce in Vietnam.
As SK Group's restructuring efforts gain momentum, an upcoming CEO seminar is expected to shed light on the group's future direction. Scheduled to take place in Icheon, Gyeonggi Province, from Oct. 31, the seminar will be attended by SK Group Chairman Chey Tae-won and SK SUPEX Council Chair Chey Chang-won.