Samsung plans bonuses tied to share price in major pay overhaul

[SEOUL] Samsung Electronics is awarding shares and bonuses based on stock price to rank-and-file employees for the first time, the latest step in a compensation overhaul aimed at rejuvenating South Korea’s largest company.

Under a new programme, the firm will grant payouts to staff over three years based on Samsung’s stock price starting this October through October 2028, according to an internal memo seen by Bloomberg News. It will also offer workers the option to get up to half of that payout in shares instead of cash, the memo outlined.

The move underscores Samsung’s effort to address growing dissatisfaction within the ranks at a time Samsung’s dominance is under pressure in key markets such as AI memory. It’s also grappling with unions demanding a more equitable bonus structure.

The staff awards programme expands a decision earlier this year to pay a portion of executive bonuses in stock, which marked a fundamental shift in higher-level compensation. Other than a one-time distribution of 30 shares to each person this year as part of a negotiation package agreed on with its union, Samsung has never dished out stock awards to all employees.

Employee dissatisfaction has grown in part because of record profits and lucrative compensation packages at rival memory chipmaker SK Hynix, which in past years has become the biggest provider of high-bandwidth memory chips to Nvidia.

The labour movement gained leverage after SK Hynix agreed to allocate 10 per cent of its annual operating profit to its employee bonus pool. That decision set a precedent for transparent profit-sharing compensation within the Korean tech industry.

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Since then, an alliance of unions from Samsung affiliates has demanded a revamp of its bonus systems, asking Samsung to allocate 15 per cent of its annual operating profit directly to the excess-profit sharing bonus pool. BLOOMBERG