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Samsung to introduce performance stock units program amid employee discontent

Published: 14 Oct. 2025, 19:01 Updated: 14 Oct. 2025, 20:17

A Samsung Electronics logo and a computer motherboard appear in this illustration taken Aug. 25, 2025. [REUTERS/YONHAP]

Samsung Electronics has unveiled a new performance-linked stock compensation system in an apparent effort to address growing employee dissatisfaction over bonuses.

The move reflects the company's plan to expand rewards while encouraging stock price growth, thereby enhancing shareholder value. It is also being viewed as a concrete step in Chairman Lee Jae-yong's plan toward performance-oriented management.

The company announced on Tuesday that it will introduce a Performance Stock Units (PSU) program, a new compensation scheme tied to stock performance.

Until now, Samsung has provided bonuses of up to 50 percent of annual salary through an overall performance incentive (OPI), and up to 100 percent of base pay through a target achievement incentive. Under the PSU system, employees will instead receive company shares, not cash.

The PSU plan is structured so that the higher Samsung Electronics’ stock price rises, the greater the employees’ rewards. While some companies, such as Hanwha, operate restricted stock units, which employees can sell only after a set holding period, Samsung’s system differs in that the final number of shares granted will vary depending on how much the company’s share price increases over the next three years.

For example, if an employee is promised 200 shares at a base price of 90,000 won ($63), the current value would be 18 million won. If the share price doubles to 180,000 won in three years, the number of shares granted will also double to 400, making the total payout worth 72 million won.

Samsung plans to grant 200 shares to entry- and assistant manager-level employees — known internally as career levels (CL) 1 and 2 respectively — and 300 shares to managers, senior managers and department heads, or CL3 and CL4, in October. The final number of shares will be determined after three years, based on stock price performance, and distributed in stages from 2028 to 2030.

A woman walks past a logo of Samsung Electronics displayed on a glass door at the company's Seocho building in southern Seoul on July 8, 2025. [AFP/YONHAP]

The company explained that the base stock price for the PSU program is expected to be around 85,000 won. If the stock price rises less than 20 percent over the three-year period, no shares will be distributed. A 20 to 40 percent increase will result in half the initial grant being paid out, with progressively higher multipliers for greater growth — up to double the original grant if the share price doubles.

Industry observers say the new program reflects Samsung’s determination to improve workplace morale and strengthen long-term competitiveness. Discontent has been growing among employees since rival chipmaker SK hynix decided to distribute bonuses equivalent to 10 percent of its annual operating profit to all employees after union pressure, resulting in payouts exceeding 100 million won per person on average.

The Samsung Group United Union (SGUU) has also called for changes to Samsung’s incentive system, publicly comparing it to SK hynix’s and sparking internal controversy.

“Chairman Lee appears to have made a bold decision to ensure that future company performance directly translates into greater rewards for employees,” an industry insider said.

Performance-linked stock rewards are already widely used by global chipmakers and tech giants such as Nvidia and TSMC, where they are credited with driving motivation and loyalty. Nvidia, for example, maintains a turnover rate of just 2.5 percent — far below the semiconductor industry average of 16.4 percent — thanks to such “shared destiny” compensation structures.

A Samsung flag flutters outside the company's Seocho building in Seoul on July 8, 2025. [AFP/ YONHAP]

“Unlike the OPI system, which rewards short-term results, the PSU is a forward-looking compensation model that ties employee benefits to future corporate performance,” a Samsung Electronics spokesperson said.

However, union leaders remain skeptical. A SGUU representative said the plan's intention to share long-term success with employees was positive but added that “the structure offers little in terms of immediate reward.”

The union also criticized the zero-payout clause, which applies if the share price rises less than 20 percent. “The company should first increase transparency in its bonus criteria and abolish the performance cap as SK hynix has done,” the official said.

Yang Hee-dong, a professor of business administration at Ewha Womans University, noted that Korean employees tend to prefer immediate cash bonuses over stock-based rewards. “From a company’s perspective, however, stock-linked compensation can help retain key talent and prevent technology leaks,” he said.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE GA-RAM [[email protected]]