Samsung union favors cash bonuses over proposed stock compensation system

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Samsung union favors cash bonuses over proposed stock compensation system

Published: 22 Oct. 2025, 14:21

Audio report: written by reporters, read by AI

Samsung Electronics' headquarters in Seocho District, southern Seoul, on Oct. 14 [YONHAP]

What happens to workers when a company’s stock price doubles in three years? Unless someone has bet against their own company, most employees would welcome the news.

It can be a source of pride — a sign they contributed to the company’s growth. Add stock rewards worth 70 to 100 million won ($48,910 to $69,880) per person, and it sounds like a best-case scenario.

But some are arguing the opposite — that a doubling of the stock price could be a disadvantage to workers.

On Monday, Samsung's largest umbrella union sent a formal letter to management raising concerns about a new stock-based compensation system, called performance share units, or PSUs. The union also filed a complaint with the Ministry of Employment and Labor.

Samsung Electronics announced the PSU program on Oct. 14. Under the scheme, employees receive an allocation of shares over three years depending on the stock price three years from now, with payouts multiplying based on the performance of the company's shares.

The system, therefore, would mean that if Samsung’s stock rises 100 percent by October 2028 to 170,770 won per share, entry-level employees will receive 68 million won in shares, while managers and above will receive shares worth 100 million won.

Until now, Samsung has only offered short-term compensation — annual and semiannual cash bonuses based on performance targets. It did not have long-term rewards like stock options or restricted stock units issued through a vesting plan.

Samsung Electronics' headquarters in Seocho District, southern Seoul, on July 10. [NEWS1

This has often been cited as a reason the company is focused on short-term results. It’s a mismatch with the nature of the electronics and semiconductor industry, where research and development and investments pay off years down the line. The PSU program was introduced to address that.

The union is opposed to this, arguing that if Samsung shares do hit the 170,000 won mark, the company will have to spend 11 trillion won on PSUs — which, in turn, could reduce the amount available for cash bonuses annually, a concern that appears to be more focused on short-term cash compensation than long-term rewards.

“The PSU structure shifts responsibility for share price increases onto employees,” the union claimed.

Despite rhetoric expressing concern about "responsibility" for the share price, under the PSU system, employees face no penalty if it falls. They are only rewarded if it rises more than 20 percent. The labor group's statement, however, appears to convey a disinclination toward any link between the stock value and worker performance.

Samsung has clarified in regulatory filings that stock buybacks for PSUs are separate from its broader share buyback program. Nevertheless, the union has doubled down, suggesting the program may be an attempt to avoid canceling treasury shares.

Members of Samsung Group's umbrella union attend a rally in front of the company's headquarters in Seocho District, southern Seoul, on Sept. 30. [YONHAP]

It also warned that it plans to take the issue to major media outlets, including Korea’s three national broadcasters, and demanded a detailed response.

Samsung’s semiconductor division struggled over the past two years, and employees received no performance bonuses at the end of 2023. But thanks to booming demand for AI memory chips, Samsung posted an operating profit of 12 trillion won in the third quarter — a surprise turnaround.

Analysts expect a strong year in 2026, meaning there may be several years of healthy cash bonuses ahead, a potential driver behind the union's pushback.

The company has been here before. During the 2017–2019 memory boom, Samsung did not respond to market changes. As a result, it lost its 30-year grip on the No. 1 spot in dynamic random-access memory to SK hynix earlier this year. Now that the business is recovering, there are calls for Samsung to reform its short-term reward culture — starting with its compensation system.

Such a reform would require the union to also evolve. It has repeatedly criticized management for focusing on short-term profits and missing out on high bandwidth memory investments. Yet now it is demanding maximum cash rewards while rejecting long-term incentives.

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 SHIM SEO-HYUN [[email protected]]