Samsung Electronics is expected to initiate a share buyback program worth 90 trillion won ($67 billion) soon. This move comes amid projections of record earnings driven by a semiconductor supercycle, alongside the need to secure shares for special management bonuses and performance stock units (PSUs).
According to industry sources on June 24, Samsung plans to buy back 290 million shares over three years to fund the special management bonuses. Detailed plans are expected to be announced shortly.
As per a recent labor-management agreement, Samsung will distribute 10.5% of its operating profit as special management bonuses in the form of shares to its semiconductor division, while employees in other sectors will receive shares valued at 6 million won. Additionally, shares must be acquired for the PSU program introduced last October, which aims to enhance accountability among employees regarding long-term business performance.
Recent estimates from the securities industry suggest that the total amount over the next three years could reach 1,471 trillion won, necessitating 93 trillion won for bonuses after taxes. The PSU commitments are expected to amount to 22 trillion won. Samsung plans to distribute 200 shares to employees at the staff and assistant manager levels, and 300 shares to managers and higher.
Currently, Samsung holds 82.09 million shares, valued at approximately 25 trillion won based on recent closing prices. When combining the amounts for special management bonuses and PSUs, the total could reach 115 trillion won, indicating a need for an additional 90 trillion won in buybacks, even after accounting for existing holdings. Industry consensus suggests that to distribute this year's special management bonuses by early next year, the buyback should commence next month.
This buyback represents about 290 million shares, or roughly 5% of Samsung's total common stock. Considering that Samsung has spent about 30.7 trillion won on share buybacks over the past decade to enhance shareholder value, this upcoming buyback will absorb nearly three times that amount from the market over the next three years.
Analysts predict that such a large-scale buyback could improve supply-demand dynamics. Two-thirds of the shares distributed as special management bonuses will be subject to a two-year selling restriction. The combination of reduced circulating shares and the long-term lock-up effect could positively impact the stock price.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.