While most CEOs would feel responsible for their company's financial condition, GeneOne Life Science CEO Park Young-geun is facing backlash for allegedly raising his salary while the company is losing money.

GeneOne Life Science has been in a deficit for the past 18 consecutive years and retail investors are angered by Park's "unethical" paycheck.

According to the company's 2022 audit report, CEO Park received a total of 9.4 billion won ($7.2 million) in salary last year, including 5.6 billion won from GeneOne Life Science and 3.8 billion won from its subsidiary VGXI.

Considering that the company posted consolidated revenue of 48.7 billion won last year, Park received about 20 percent of the company's revenue.

The company is expected to continue its deficit this year, as it already posted an operating loss of 13 billion won in the first quarter.

Even when excluding paycheck from GeneOne, Park's hefty compensation from VGXI is also not necessarily based on performance.

In 2022, VGXI posted a net loss of 8.8 billion won on revenue of 31.1 billion won. It also posted a net loss of about 900 million won in 2021.

Even as the company continues to lose money, more than 10 percent of VGXI's revenue in 2022 has gone into Park's pocket.

Adding on to the woes of retail investors, Park's salary has been increasing in the past five years despite the company's sluggish overall performance.

Over the past five years, he has taken home 35.8 billion won in compensation. Park received 3.8 billion won from GeneOne and VGXI in 2018, followed by 4.5 billion won in 2019, 8.1 billion won in 2020, and 10 billion won in 2021.

This year, he reportedly received about 2.1 billion won for the first half of the year.

Securities analysts also agree with retail investors that Park's huge salary is a significant burden on the management of GeneOne.

"Last year, GeneOne Life Sciences' consolidated selling, general, and administrative (SG&A) expense was 49.4 billion won, which was higher than the company's total sales," an analyst told Korea Biomedical Review. "Notably, salaries accounted for the largest percentage of the company's SG&A expenses, amounting to 20.4 billion won, in which Park's salary accounted for nearly half of the total."

Continued capital increase also a source of concern

Despite such poor business performance, GeneOne has been continuously promoting shareholder allocation capital increase in the name of supplementing the shortage of operating funds.

While the company had said that the capital increase is to foster VGXI's contract development and manufacturing organization (CDMO) business, its CDMO business has yet to produce any significant results.

In July 2020, GeneOne raised 76.5 billion won through a general public offering of common stock after shareholder allocation, of which 65 billion won was allocated to fund VGXI's new facility.

In November 2021, the company announced a capital increase of 113.8 billion won, with 90.8 billion won going to VGXI.

Using these funds, the company planned to build a new plant in the U.S. with a total capacity of 7500 liters in addition to the existing plant, which had a capacity of only 700 liters.

The new plant was completed in October last year, and the first phase, a 3,000-liter facility, began operation in May this year.

CEO Park had also expressed high hopes about the company's new CDMO business, saying that he expects the company's annual sales will reach 500 billion won after the first expansion in a series of interviews with various local media last year.

However, the size of the order is far from Park's expectations.

GeneOne's CMO deal has only increased from $13.7 million (about 17.5 billion won) in 2021 to $22 million (about 28 billion won) in 2022, and remained at $11.3 million (about 14.4 billion won) in the first five months of this year.

Retail shareholders to take more aggressive action

As the company continues to show no significant achievements despite the continued capital increase, retail investors have criticized the situation, saying that the company is paying the CEO's salary through the capital increase.

The situation has deteriorated to a point where shareholders are threatening collective action.

Recently, according to industry watchers, some investors have been pushing for the removal of the golden parachute clause, which states that the company must pay 10 billion won in compensation if the CEO is dismissed during his term.

The Articles of Association of GeneOne states that directors' compensation is capped at 50 billion won per year, and that compensation other than severance pay must be paid if they are removed during their term of office.

Specifically, if a CEO is removed against their will due to a hostile takeover or merger during their term of office, if they resign involuntarily during their term of office, or if they are removed by a resolution of the shareholders' meeting during their term of office for any reason, the company must pay a severance check of 10 billion won.

The minority shareholders are preparing to propose the removal of the clause at an extraordinary general meeting later this year and are currently gathering shares to pass the agenda.

Considering that minority shareholders hold 92.05 percent of the company's stock, industry watchers expect a high chance that the clause will pass.