"40 Trillion Won in Bonuses Despite Falling Share Price? Minority Shareholders of Samsung Electronics Outraged"

ACT Claims "Annual Performance Bonus Payments of 40 Trillion Won"
Minority Shareholders Gather Signatures, Plan to Submit Letter on July 20

As debate continues over the performance-based bonus agreement between management and labor at Samsung Electronics, minority shareholders have argued that performance bonuses of a scale amounting to hundreds of trillions of won should require final approval at a general shareholders' meeting.

Yonhap News

According to the industry on July 17, the minority shareholder platform 'ACT' plans to deliver a letter to the National Pension Service Fund Management Division expressing concerns that the '2026 Wage Agreement' and performance bonus deal between Samsung Electronics' management and labor have been finalized and implemented without shareholder meeting approval procedures. The National Pension Service is the largest institutional investor, holding a 7.9% stake in Samsung Electronics.

Earlier, Samsung Electronics newly introduced a special management incentive system for its Device Solutions (DS) division, funding it with 10.5% of its operating profit and deciding to pay out these incentives in company shares over the next 10 years. In response, ACT stated, "Based on this year's performance, up to approximately 40 trillion won could be paid out annually in performance bonuses," and expressed concern that "over a period of 10 years, hundreds of trillions of won could flow out without shareholder meeting approval." They added that, as the government is currently moving forward with a plan to require board resolution for performance bonuses, the system should be further revised to mandate final approval through a general shareholders' meeting.

In the letter, ACT noted, "Even the director compensation limit, which is set at several tens of billions of won, requires shareholder meeting approval, yet performance bonuses reaching tens of trillions of won are executed solely based on a board decision, which is directly contrary to the intent of the Commercial Act." The letter further warned, "If the National Pension Service, despite concerns over a massive outflow of national wealth, fails to fulfill its fiduciary responsibility and simply stands by, the six million minority shareholders of Samsung Electronics will have no choice but to strongly call attention to this neglect of duty."

ACT also pointed to the recent decline in Samsung Electronics' share price, stating, "When the share price falls, the loss is borne entirely by the shareholders, but employees still receive performance bonuses tied to operating profit regardless of stock performance." They added that, "The risk is carried by shareholders while the benefits are shared by employees without bearing risk, and shareholder concerns over this risk asymmetry are spreading rapidly."

According to ACT, as of July 16, 424 shareholders, collectively holding 207,724 shares, had signed the letter. ACT plans to collect additional electronic signatures through July 19 and formally submit the letter on July 20.

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