Samsung Electronics and its labor union have confirmed that their tentative wage and collective bargaining agreement, reached just before a general strike, includes a 10-year validity period for the bonus system. This agreement not only establishes the method for calculating bonuses but also formalizes the payment method and duration, setting the framework for Samsung's performance compensation system for the next decade.
According to industry sources on May 20, Samsung and the union signed the tentative agreement and decided to postpone the general strike while proceeding with a member vote from May 23 to 28. The agreement reportedly includes a total bonus of 12%, combining an OPI of 1.5% and a special management bonus of 10.5%.
The bonuses will be calculated based on performance criteria agreed upon by both parties. The previously contentious cap on bonus amounts has been eliminated. The special management bonus will only be paid if minimum operating profit requirements are met. If performance falls below certain thresholds, the special bonus will not be awarded.
A notable aspect of the agreement is the payment method. The tentative agreement stipulates that bonuses will be paid entirely in company stock after taxes, rather than in cash. This approach is seen as a compromise aimed at linking employee compensation to the company's long-term value. It is also reported that there will be restrictions on the sale of these shares.
The distribution structure for bonuses has also been established. Sixty percent of the total will be allocated to profitable divisions within the DS sector, while the remaining 40% will be distributed across the entire DS division. Differential treatment for unprofitable divisions will be implemented starting in 2027. Although there were last-minute conflicts over compensation for unprofitable divisions, both sides found common ground by not applying penalties for this year's bonuses.
Industry observers believe this agreement shifts the focus of the Samsung bonus debate from "how much will be received this year" to "what criteria will be used for future distributions." The 10-year validity period and stock payment method place burdens and responsibilities on both the company and the union. The company must institutionalize the bonus criteria over the long term, while the union must accept the uncertainties associated with stock prices and performance. However, the special management bonus will only be awarded if minimum operating profit is achieved during the 10-year period.
The agreement also includes provisions for cooperative initiatives. Samsung plans to announce a funding plan for cooperative efforts soon and will operate joint programs with the union. This is interpreted as a measure to mitigate external impacts, given the concerns about the general strike affecting suppliers and the semiconductor ecosystem.
The union will inform its members about the tentative agreement and conduct a direct and secret ballot for approval. The agreement must receive majority attendance and majority support to be finalized. The union has decided to postpone the planned general strike until the voting results are announced.
This tentative agreement was reached after negotiations resumed under the leadership of Minister of Employment and Labor Kim Young-hoon, following the breakdown of mediation by the Central Labor Relations Commission the previous day. While the worst-case scenario of a first-ever general strike at Samsung Electronics has been averted for now, the long-term implications of the bonus calculation criteria and stock payment method will likely be evaluated during the member voting process.
* This article has been translated by AI.
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