Samsung Electro-Mechanics has announced a significant change to its excess profit incentive (OPI) calculation method, shifting from the previous standard of 20% of economic value added (EVA) to 10% of operating profit. This change aims to simplify the bonus calculation process and enhance transparency in employee compensation.
On July 1, Samsung Electro-Mechanics disclosed the results of an employee vote regarding the OPI criteria change. Out of 12,886 eligible voters, 9,343 participated, resulting in a turnout of 72.5%.
Among those who voted, an overwhelming 97.1% (9,068 votes) supported the new operating profit-linked method, while only 2.9% (275 votes) favored retaining the existing EVA approach.
The OPI is awarded annually when a business unit exceeds its performance targets set at the beginning of the year, allowing for a payout of up to 50% of an individual's salary within a cap of 20% of excess profits. It is considered one of Samsung's key performance incentive systems, alongside the target achievement incentive (TAI).
The primary focus of this revision is to ensure predictability in bonus calculations. The previous EVA method involved a complex formula that subtracted capital costs from after-tax operating profit, making it difficult for employees to estimate their bonuses. In contrast, the new standard provides a clear compensation structure based on operating profit levels.
Samsung Electro-Mechanics confirmed the new system through an internal announcement without requiring additional procedures. The revised OPI will take effect starting with the bonuses paid in January 2027, based on this year’s performance.
With the simplification of the bonus calculation to an 'operating profit N%' structure, significant ripple effects are expected on the incentive systems of other Samsung affiliates, such as Samsung Display and Samsung SDI.
* This article has been translated by AI.
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