SEOUL -- A top Hyundai Motor Co. executive was forced to resign last month because he rewarded employees who helped Hyundai improve its J.D. Power quality ranking.
Company sources say Park Hwang Ho was removed under pressure from Hyundai's employee union. Company insiders say the 58-year-old executive was punished because he gave special bonuses to 370 employees in the Quality Management Division. The bonuses averaged $833 per employee.
The union wanted the bonuses paid to all its members.
Hyundai since has agreed to pay more than $29 million in quality-related bonuses to about 35,000 junior-level employees.
Park was one of four presidents at Hyundai Motor. His responsibilities included sales and finance. He reported to Vice Chairman Kim Dong Jin, who will assume Park's duties. Park will remain with the company as a paid adviser.
Hyundai's quality scores surged in the 2004 J.D. Power and Associates Initial Quality Study released in April. The Hyundai brand outscored Toyota Division based on problems per 100 vehicles in the first 90 days of ownership. Park said the Quality Management Division employees led Hyundai's drive to improve quality.
But Hyundai's union wanted bonuses paid to all workers below manager level at the company's plants in Ulsan, Asan and Jeonju, South Korea. The money will go to about 35,000 of Hyundai Motor's approximately 50,000 workers.
"We asked management to punish or fire the person who is responsible for the bonuses," said union spokesman Chang Kyu Ho. "Wage payment is an issue management has to discuss with us, the union."
A Hyundai insider confirmed that the union's objections led to Park's dismissal. "Management promised to fire him and to offer the same bonuses to 35,000 junior Hyundai workers," the source said.
The quality bonus to all workers - which also averaged $833 - helped end a five-day strike on July 1. Employees had walked off the job in connection with annual wage talks. The two sides agreed to a pay increase of just over 6 percent.
The sources said Park also was under pressure because Hyundai recently lost a bid to become the official sponsor of the 2008 Beijing Olympics to rival Volkswagen.
A spokesman said Park resigned to "pave the way for young executives" to be promoted. But two other Hyundai presidents are the same age as Park. Kim Sang Kwon, r&d president, and Jeon Cheon Soo, head of Hyundai's main Ulsan plant, are 58.
Park, an engineer, had been in the job since last August. He joined Hyundai in 1968 and held mostly manufacturing jobs.