Chairman Lim Sung-ki and Hanmi Pharmaceutical

Lim Sung-ki, the chairman of Hanmi Pharmaceutical Company, graduated from Pharmacy Department of Chung-Ang University and opened a pharmacy named after himself in downtown Seoul in 1967 when he was only 27. His pharmacy soon became famous as it dealt in medicines for venereal disease, which was rare back then. For young men who contracted "embarrassing conditions" while serving in the military, Lim’s pharmacy served as a "sanctuary." Incidentally, some questioned if he had changed his name intentionally as his original name had coincidental relevance with the main staple of his business.

After establishing Hanmi Pharmaceutical in 1973, Lim said that it was his life-long dream to develop a proper medicine for the global market. Despite the financial deficits during the 2010-2011 period, his company invested 80 billion won (67.25 million dollars) in R&D every year. In 2014, the company increased the R&D investments to 135.4 billion won (113.8 million dollars), 38 times larger than its annual operating profit. The R&D center has become the incubator of success for Hanmi, making it possible to sign last year`s export contracts for new medicine development technologies worth 8 trillion won (6.72 billion dollars) with global pharmaceutical giants such as Boehringer Ingelheim, Sanofi and Janssen.

On Monday, Lim announced his sizable bonus plan to grant 900,000 stocks (worth 92.47 million dollars) out of his personal shares in Hanmi Science (holding company of Hanmi Pharmaceutical Company) to 2,800 employees. The new year’s gift from the chairman is 1,000 percent of the monthly paycheck. If the separate bonus worth 200 percent of the monthly income is included, the additional bonus equals the whole annual salary. Lim said that he decided to grant his personal shares to pay back he felt indebted to the employees for working around the clock to implement the R&D investments as planned.

The Anglo-American shareholder capitalism values expansion of dividends for shareholders. In contrast, the stakeholder capitalism upheld by Germany and Japan cares about the employees, clients, and even subcontractors as well as shareholders. The former certainly has virtue, but when the employees’ morale is lowered, it is hard for the company to pursue sustainable management. On the threshold of becoming a global giant, Hanmi proposed a new model of sharing the profits from the rise in stock prices not only with the shareholders but with the employees.

shkwon@donga.com