Samsung Group Union Coalition To Demand Reform Of Bonus System

Seoul: A coalition of unions from 13 Samsung Group affiliates was set to call for reforms in the group’s performance-based bonus system on Tuesday, following a recent change in the system of local rival SK hynix, that is expected to sharply boost its bonus payments.

The alliance said it will demand greater transparency in the calculation of bonuses in a press conference set to be held in front of Samsung Electronic Co.’s Seoul headquarters, pointing to that of SK hynix as a model example, reports Yonhap news agency.

Earlier this year, SK hynix’s management and union agreed to remove the ceiling on profit-sharing payouts and set bonus payments at 10 percent of operating profits. Samsung Group currently uses the excess profit incentive (OPI) system, which calculates bonuses by deducting certain costs, such as taxes and investment spending, from the operating profit. Under such a system, even when profits are high, the final bonus payout may end up being relatively small.

“Representing 300,000 Samsung workers, we decided to hold the press conference to urge Chairman Lee Jae-yong and Samsung Group to adopt a transparent bonus system similar to that of SK hynix,” the alliance said in a statement. Earlier this month, unionised workers of Samsung Electronics sent a letter to Chairman Lee Jae-yong, demanding the company improve the transparency of its bonus system.

In a document sent to the de facto head of Samsung Group, workers demanded the adoption of a more transparent bonus evaluation system and the abolition of the current framework based on economic value added (EVA).

“While SK hynix recently decided to allocate 10 percent of its annual operating profit to its bonus program, Samsung Electronics is still using the EVA method, which lacks transparency,” the union said, according to the report.