With voting on Samsung Electronics union's tentative wage agreement set to close at 10 a.m. on the 27th, backlash from Samsung Electronics shareholders is growing. In particular, there is strong dissatisfaction with the clause that pays bonuses based on operating profit before tax. The argument is that it is fair for investors, who share the company's risks, to receive a priority share of corporate profits.
The tentative labor-management agreement includes paying 10.5% of business performance in treasury shares as a special management performance bonus for the semiconductor (DS) institutional sector. The existing companywide cash performance bonus will be maintained, and no cap will be set on the payout rate for the special management performance bonus.
What shareholders find most problematic is the basis for calculating the bonus pool. Critics note that allocating a certain percentage of operating profit before tax—before deducting corporate tax and other taxes—as bonuses could be unlawful. A Samsung Electronics shareholder group also argues that deciding such a major bonus payment method through only the board of directors or labor-management agreement, without going through a shareholders' meeting, has procedural flaws.
Concerns are also being raised from the perspective of stakeholder capitalism. Stakeholder capitalism is a management approach that goes beyond shareholder capitalism, which prioritizes maximizing shareholder returns, to seek coexistence with a range of stakeholders, including employees, customers, partners, and local communities.
Lee Jun-seo, a professor in the Department of Business Administration at Dongguk University, said, "Even in stakeholder capitalism, the basic principle is to satisfy shareholder interests first and then consider the interests of stakeholders." Lee added, "Because the distribution was decided only for stakeholders other than shareholders—specifically, only for workers—this is a method that does not exist within the concept of capitalism."
There are also worries that this could negatively affect Samsung Electronics' shareholder return policy. Under its triennial shareholder return policy, Samsung Electronics has been returning 50% of free cash flow (FCF) to shareholders and paying regular annual dividends of 9.8 trillion won. Buoyed by improved results last year, the company in Jan. carried out a special dividend of 1.3 trillion won for the first time in five years, lifting total annual dividends to 11.1 trillion won.
In particular, as projections pointed to record earnings this year, shareholders' expectations for a special dividend had been rising. However, critics say that if, under this labor-management deal, a large portion of corporate funds flows out as fixed-cost performance compensation, the resources for shareholder returns could shrink by that much.
Min Kyung-kwon, head of the Samsung Electronics shareholder group "Korea Shareholder Action Headquarters," said, "Based on last year alone, shareholders could demand 175 trillion won in shareholder returns, but we are not making excessive demands out of consideration for the company's future," adding, "Samsung Electronics is in an upswing now, but it must prepare for an unpredictable downturn, and investment in technology and the development of future growth engines are urgent."
Min went on to emphasize, "Just as shareholders first consider the survival of corporations, workers should also prioritize the company's future and continuity."
Meanwhile, voting on the Samsung Electronics union's tentative wage agreement is scheduled to run until 10 a.m. on the 27th. However, labor-labor conflict continues, as the three major unions—made up mainly of non-semiconductor employees at Samsung Electronics—filed for an injunction in court that day to halt the vote.