There are growing concerns that the performance bonus plan recently agreed to by Samsung Electronics labor and management will trigger a massive aftershock across industry. The business community says there has been no precedent in which tens of thousands of employees with stable jobs received performance bonuses worth hundreds of millions of won regardless of individual performance while bearing no management responsibility for investments, and warns that if the same standard is applied at other corporations, investment capacity will shrink and competitiveness will weaken.
According to the business community on the 22nd, Samsung Electronics labor and management on the 20th agreed on a compensation plan that fixes a portion in the 10% range of business performance as the performance bonus pool. Accordingly, employees in the semiconductor (DS) institutional sector are expected to receive performance bonuses of up to about 600 million won this year (pre-tax, based on an annual salary of 100 million won).
As of the end of last year, the number of domestic employees in Samsung Electronics' DS institutional sector was 78,064. According to Samsung Electronics' business report filed with the Financial Supervisory Service, the average annual salary of all employees was 158 million won.
◇ Number of executives earning 500 million won or more a year is only in the 0.1% range across all listed companies
There has been no case in Korea's industrial sector where large numbers of employees, including production roles, received performance bonuses of this magnitude. Among all listed corporations, the share of people receiving hundreds of millions of won in compensation is limited to a small group of top-tier executives.
According to a report recently published by the Capital Markets Research Institute, as of 2024 the share of executives among all listed corporations on the Korea Exchange main board who received annual compensation of 500 million won or more barely exceeded 0.15%. Looking at KOSDAQ-listed companies, the share of executives who received 500 million won or more did not even reach 0.1%.
The share of corporations that have executives receiving 500 million won or more in compensation was 0.5% among main-board listed companies and in the 0.2% range among KOSDAQ-listed companies.
Given that executives' salaries and performance bonuses are larger than those of employees, if those surveyed are expanded to all employees, the share of people at domestic corporations earning 500 million won or more annually can only be even lower.
◇ Executives on fixed-term contracts still bear responsibility… "Benefits without risk"
In particular, executives who receive large salaries and performance bonuses tend to have short tenures and face job insecurity. Unlike regular employees whose job stability is guaranteed, most executives are converted to fixed-term contracts and must leave their posts or accept cuts to salary and performance bonuses depending on results during their tenure.
In some sectors such as securities firms, non-executive employees also receive large performance bonuses based on results. But they too must deliver high individual performance in areas such as sales, meaning they have to bear risks in employment and compensation. In such jobs, the base salary is often not high because performance-based bonuses account for a large share.
A business community source said, "Executives and some star employees who receive large sums reaching into the hundreds of millions of won can't help but face the risk of their status being shaken each year depending on individual performance."
The person added, "By contrast, in this Samsung Electronics DS institutional sector case, tens of thousands of employees with guaranteed jobs will pocket hundreds of millions of won in bonuses, and SK hynix is likewise set to hold a similar 'money feast,'" and said, "There has been no such precedent in Korean economic history."
Moreover, ordinary employees at Samsung Electronics do not bear responsibility for corporate management such as investment failures. This means the contracted base salary is paid as is even if the company's circumstances deteriorate.
Questions are also being raised about whether Samsung Electronics' performance bonus agreement truly resulted from fair negotiations. With the risk of massive losses during a semiconductor boom if the union went on strike, Samsung Electronics had no choice but to raise the white flag, the argument goes.
The Samsung Electronics union had threatened that if talks broke down, it would stage a general strike for 18 days from the 21st to July 7. If the strike had materialized, projections said Samsung Electronics would suffer losses of 1 trillion won per day and at least 20 trillion to 30 trillion won over the 18-day strike period.
◇ More people voicing emptiness and a sense of deprivation… concern it could spread across the business community
In the business community, there is widespread concern that Samsung Electronics' performance bonus agreement could become the "new normal." Other corporations are also highly likely to have unions lead employees to demand performance bonuses fixed at a certain ratio tied to company results along with job security.
In fact, after news of Samsung Electronics' performance bonus agreement broke, more office workers have been expressing feelings of emptiness or relative deprivation. Even within Samsung Electronics, employees in organizations other than the DS institutional sector are being excluded from the large bonus feast and are pushing back against the agreement. In the Device eXperience (DX) institutional sector, employees' compensation levels are expected to be limited to 6 million won.
The National Samsung Electronics Union (NSEU) Suwon Chapter and the Accompanying Union held an emergency press conference in front of the main gate of the Samsung Electronics Suwon campus on the 22nd, saying, "This agreement was a hasty and shoddy deal that degenerated into a performance-bonus negotiation for the semiconductor memory division," and declared they would launch a full-scale rejection campaign.
Unions at other large corporations are already pouring out demands to fix a certain ratio of net profit as performance bonuses, as with Samsung Electronics. There are concerns that unions at these corporations are now more likely to cite the Samsung Electronics case to ratchet up the intensity of their struggle.
Ahead of this year's wage talks, the Hyundai Motor union sent management a demand that included paying 30% of last year's net profit as performance bonuses. The integrated union at HD Hyundai Heavy Industries also demanded that 30% or more of operating profit be distributed as performance, and argued that operating-profit-linked performance bonus standards must be codified in the collective agreement. In addition, Doosan Enerbility, Samsung Biologics, and LG Uplus have also successively demanded compensation linked to results.
A business community source said, "Corporations' investments are made reflecting many external variables and risks," and added, "Even if results improve one year, in the following year they often have to move toward austerity and expense cuts." The person warned, "If a fixed ratio of annual results is paid out as compensation each year, corporations could face crises due to cash shortages when funds are truly needed, which in the long term can only lead to weakened competitiveness."