Samsung Electronics will implement a record shareholder return of up to 110 trillion won this year, significantly exceeding the previous highest amount recorded by a domestic company by nearly five times. This move comes as the company aims to address rising shareholder dissatisfaction regarding employee compensation while sharing the benefits of improved semiconductor performance.
On August 21, Samsung's board of directors approved a plan to return approximately 90 trillion to 110 trillion won to shareholders in 2026. This amount is about five times the previous record of 20.3 trillion won set in 2020. Compared to the average annual shareholder return of 13.8 trillion won from 2016 to 2025, the new figure represents an increase of nearly seven times. Samsung will also continue its existing policy of utilizing 50% of its free cash flow (FCF) for shareholder returns from 2024 to 2026.
This decision reflects Samsung's commitment to actively return cash generated from improved performance to shareholders. Including the anticipated shareholder return for this year, the total shareholder return for the three years from 2024 to 2026 is expected to reach between 120 trillion and 140 trillion won.
Samsung's expansion of shareholder returns is not a one-time measure. Since its listing on the domestic stock market in 1975, the company has paid cash dividends every year except for 1980. In 2016, it introduced a policy to allocate 50% of FCF for shareholder returns, and since 2017, it has established a quarterly dividend system, providing dividends four times a year.
The regular dividend amount has been consistently maintained. Since 2018, Samsung has paid an annual regular dividend of 9.6 trillion won, which increased to 9.8 trillion won starting in 2021. Following the principle of additional returns from remaining funds after regular dividends, the company paid a special dividend of 10.7 trillion won in the fourth quarter of 2020 and 1.3 trillion won in the fourth quarter of last year. Cumulatively, cash dividends from 2015 to the fourth quarter of last year exceeded 102.8 trillion won.
In addition to dividends, Samsung has also engaged in share buybacks and cancellations. From 2015 to the end of last year, the company repurchased a total of 38 trillion won worth of its own shares, using them for employee compensation or cancellation to enhance shareholder value.
In the third quarter of this year, Samsung plans to implement approximately 30 trillion won in cash dividends, including regular quarterly dividends. The specific amount will be finalized at the board meeting at the end of October. The remaining shareholder return amount and method will be determined at the board meeting at the end of January next year, considering both cash dividends and share buybacks and cancellations.
This decision is expected to address the gap between employee compensation and shareholder value that has recently emerged within Samsung. The company has been increasing employee bonuses based on improved semiconductor business performance. However, shareholders have expressed dissatisfaction regarding whether the benefits of improved performance are adequately reflected in stock prices and dividends. This large-scale shareholder return sends a message that the company intends to directly distribute its achievements to shareholders, potentially alleviating some of these concerns.
Samsung also approved a share buyback plan worth approximately 15 trillion won for employee compensation. While this is distinct from shareholder returns, the reduction in circulating shares due to the buyback could enhance per-share value. This structure aims to simultaneously promote employee compensation and shareholder value enhancement.
Samsung's approach to shareholder returns as an integral part of its management strategy is significant. The company has maintained a structure that shares the benefits of improved cash flow with shareholders while continuing large-scale facility investments and future business investments. This unprecedented level of return is a result of the alignment of this policy with the recovery of the semiconductor market.
SK Hynix is also strengthening its shareholder returns based on improved cash generation from the memory market. Domestic semiconductor companies are now competing over how much of the cash secured from improved performance will be returned to shareholders, in addition to investments in facilities and research and development.
Samsung plans to faithfully implement its shareholder return policy and actively communicate related plans to shareholders and the market. Whether this record return will lead to an actual increase in shareholder value and whether the company will continue this return trend in the future are key points of interest for the market.
* This article has been translated by AI.
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