[Exclusive] Samsung Electro-Mechanics Begins Voting on Incentive Criteria Reform for All Employees Until the 30th

Change to "20% of EVA" or "10% of operating profit"
If passed, new standards apply to next year's payout
Samsung Electronics-led incentive reform spreads to affiliates

Samsung Electro-Mechanics has officially begun work to revise the criteria for calculating its excess profit incentive (OPI). This marks the first case among Samsung affiliates to push for changes in the incentive system following last month's agreement between labor and management at Samsung Electronics to introduce a "special management performance bonus." It is seen as a signal that the incentive system initiated by Samsung Electronics may now begin to spread throughout its affiliates.

Samsung Electro-Mechanics Suwon Plant View. Samsung Electro-Mechanics

According to industry sources on June 19, the labor-management council of Samsung Electro-Mechanics has been gathering votes and opinions from all employees since the previous day regarding the plan to change the OPI calculation basis from the existing Economic Value Added (EVA) to either "20% of EVA" or "10% of operating profit." Voting is scheduled to close by June 30. However, if the voter turnout is low, the voting period may be extended.

There have been ongoing complaints among Samsung Electro-Mechanics employees regarding the incentive calculation criteria. For example, even though the company posted over 600 billion won in operating profit in 2023, employees received incentives equating to only about 1% of their annual salary due to the complex EVA formula, leading to strong backlash. Such accumulated dissatisfaction reportedly led to the revision of the OPI criteria becoming an agenda item in this year’s wage negotiations.

If the proposed changes to the incentive criteria pass the vote and are finalized, employees will receive their OPIs based on the new standards starting in January next year. Notably, as investment in artificial intelligence (AI) expands, the incentives employees receive are expected to increase significantly. This is because sales of key semiconductor components—such as flip-chip chip-scale packages (FC-CSP) and high-value-added multilayer ceramic capacitors (MLCC)—are surging, raising expectations for improved performance at Samsung Electro-Mechanics. The market and the securities industry forecast that the company's annual operating profit could rise to around 1.5 trillion won this year. Applying 10% of operating profit would mean that about 150 billion won would be allocated for employee incentives.

The industry views the move by Samsung Electro-Mechanics to revise its incentive system as gaining momentum following last month’s agreement between labor and management at Samsung Electronics to introduce an "operating profit-linked incentive." Initially, it was anticipated that the vote would be held in the second half of this year, but it has reportedly been brought forward to reflect the internal atmosphere after the agreement at Samsung Electronics. As Samsung Electronics secured greater transparency in its incentive system through labor-management compromise, there has been growing internal pressure for Samsung Electro-Mechanics to accelerate its own reforms.

As a result, it is expected that demands to revise the incentive calculation criteria will spread among employees at other major affiliates such as Samsung Display and Samsung SDI. Samsung Display plans to hold labor-management discussions in the second half of this year to introduce an alternative compensation system for incentives.

This content was produced with the assistance of AI translation services.