As Samsung Electronics labor and management began a two-day post-mediation process at the Central Labor Relations Commission on the 11th, attention is focused on whether the company's management principle of "no negotiations on the performance bonus formula" will be broken in this round of talks. While management's basic position is that company rules on the performance bonus system are not subject to negotiation, the union has held firm on institutionalizing the removal of the cap, keeping the two sides at an impasse.
Academia and the business community also express substantial concern over this post-mediation. The prevailing view among scholars is that the demands of the Samsung Electronics union infringe on management's discretion to a degree unheard of in the overseas semiconductor industry. There are also projections that if the union's unusual demand to be involved not in the wage increase rate but in the method of calculating performance bonuses becomes institutionalized, it will have a negative impact not only on Samsung's semiconductor business but also on Korea's corporate ecosystem as a whole.
◇ Positions of labor and management clash over performance bonuses
As the post-mediation meeting between Samsung Electronics labor and management proceeded on the 11th, Choi Seung-ho, chairperson of the Supra-Enterprise Labor Union Samsung Electronics Chapter (hereafter the supra-enterprise union), the largest union at Samsung Electronics, signaled no compromise, saying, "If the company has no position on institutionalizing (paying performance bonuses at 15% of operating profit and removing the cap), mediation will be difficult."
The ongoing post-mediation is a procedure in which the labor commission reenters mediation to resolve a labor dispute even after no agreement was reached within the mediation period. If labor and management accept the mediation proposal, it has the same effect as a collective agreement. Samsung Electronics labor and management also failed to reach agreement in mediation in February–March, but returned to talks at the persuasion of the Ministry of Employment and Labor (MOEL). If no common ground is found even in post-mediation, the company's second strike since its founding is likely to materialize.
The union is demanding transparency in the calculation method for the overachievement performance incentive (OPI) and the removal of the cap. Specifically, it argues for allocating 15% of operating profit as the performance bonus pool. The union's position is that, with semiconductor results surging on the artificial intelligence (AI) memory boom, the performance bonus system, which has been left to the company's discretion, should be replaced with a clear formula. The aim is to bring performance bonuses into the institutional framework set by labor-management agreement, rather than treating them as a one-off reward.
Management at Samsung Electronics, on the other hand, has maintained that the performance bonus formula cannot be a subject of negotiation. The logic is that performance bonuses are not items paid on a fixed basis like wages, but compensation decided by the company after comprehensively considering business performance, market conditions, and investment capacity. Instead, management is said to have proposed a 6.2% wage increase, an employee housing stability support program worth up to 500 million won, an expanded performance bonus pool, and special awards. While the scale of compensation can be increased, it said it is difficult to accept hardwiring the calculation formula into a labor-management agreement.
◇ Union demands outside global corporate standards
Experts see the essence of this negotiation not as the "size of the performance bonus," but as a fight over the "status of the performance bonus." If management reflects a performance bonus formula in the agreement, performance bonuses could become a core agenda item of annual labor talks going forward. Given the semiconductor industry's large swings between booms and busts, formalizing the performance bonus pool based on operating profit at a particular point in time could burden future investment and cost structures. This is why Samsung Electronics leaves room for special awards or temporary expansions of compensation, while drawing a line at negotiating the formula.
Some also argue that contractually codifying a set portion of operating profit, as the union demands, would infringe not only on the management policy of Samsung's semiconductor business but also on the interests of Samsung Electronics shareholders. Korea University professor Cho Myung-hyun said, "If the automatic allocation of operating profit to executives and employees is institutionalized as a clause, it could be problematic in that it takes on the character of 'pre-dividends,' infringing on Samsung Electronics shareholders' residual claim." In fact, Samsung Electronics shareholder groups are taking issue with this.
Professor Cho said, "Even in overseas corporate cases, it is very rare for unions to demand codification of a performance bonus system," adding, "Matters such as performance bonuses are generally determined on the basis of management's discretion, so they should be grounded in agreement among stakeholders, including management and shareholders. Unilaterally accepting the union's views would set a poor precedent not only for the semiconductor industry but also for Korea's corporate ecosystem overall."