As Samsung Electronics' labor and management drew up a tentative agreement that includes performance bonuses averaging 600 million won per person based on the memory division, demands to overhaul compensation systems are spreading among major affiliates. At Samsung Electro-Mechanics and Samsung Display, there is a growing mood calling for changes to performance bonus calculations and expanded compensation.
On the 25th, according to the industry, Samsung Electro-Mechanics plans to soon gather feedback from employees on a plan to change the calculation standard for the over-profit incentive (OPI) from the current focus on economic value added (EVA) to a standard of 20% of EVA or 10% of operating profit.
This is seen as reflecting the influence of Samsung Electronics' labor union, which demanded applying the operating profit standard, seen as more transparent than the existing EVA method, and management's partial acceptance of that in the recent tentative wage and collective bargaining agreement. Analysts say similar demands to overhaul the performance bonus system are growing within Samsung Electro-Mechanics.
Within Samsung Electro-Mechanics, grievances over performance bonuses had already been raised. Even though the company posted more than 600 billion won in operating profit in 2023, performance bonuses equivalent to about 1% of annual salary were paid, prompting backlash among some employees.
In particular, expectations for improved results are rising this year on the back of increased sales of substrates and multilayer ceramic capacitors (MLCC), core components of AI Semiconductor chips. The industry expects Samsung Electro-Mechanics' annual operating profit to rise to around 1.5 trillion won, and with that, demands for larger performance bonuses are projected to grow further.
Samsung Display also plans labor-management talks in the second half of this year to introduce a compensation system to replace performance bonuses. As Samsung Electronics accepted a plan to pay performance bonuses of more than 100 million won even to its loss-making non-memory division, equity concerns are reportedly emerging within affiliates struggling with poor results.
In fact, within Samsung SDI, questions are reportedly being raised about the fairness of the compensation system regardless of business performance.
Conflicts over compensation appear to be spreading to other affiliates as well. Samsung C&T's construction division concluded talks only after raising its wage hike rate from the previous 3% level to 4.3%, and the Samsung Biologics union is conducting a work-to-rule after a first strike. Analysts say the conclusion of wage and collective bargaining at Samsung Electronics is having a ripple effect on compensation system discussions across the group.