Samsung SDS is pushing to overhaul its compensation system by scrapping existing cash bonuses entirely and replacing them 100% with stock. Since the Supreme Court ruling in Jan. that recognized the wage nature of Samsung Electronics incentives, the debate over revamping compensation systems has spread to affiliates.
According to the industry on the 26th, Samsung SDS is recently holding a vote among all employees on a reform plan to abolish the current cash incentive program and pay bonuses once a year in the form of company stock. The vote is reportedly set to close on the 29th.
This overhaul was carried out on the occasion of the Supreme Court ruling in Jan. The Supreme Court, in a severance pay lawsuit filed by former employees of Samsung Electronics, recognized Samsung Electronics' performance incentive (PI) as wages, which are compensation for labor, and held that it must be included in severance pay calculations. There is an interpretation that Samsung SDS is seeking to convert cash incentives into stock bonuses to block such legal risks.
In the industry, controversy over the plan centers on the fact that a significant part of the bonus calculation criteria is tied to external indicators unrelated to employee effort. The structure is said to reflect, in addition to the rate of change in pre-tax operating profit, the company's share price increase and the Korea Composite Stock Price Index (KOSPI) IT services index. In this case, if there are fluctuations in the share price or the sector index beyond individual performance, the size of the bonus could also be affected.
However, the company is said to have responded on the internal employee portal, amid a flurry of inquiries about the system overhaul, that it would not "force it without the consent of more than 50% of members."