Up to 600 Million Won for Semiconductors, 160 Million Won Bonus for Loss-Making Non-Memory… Samsung Electronics Labor and Management Reach Tentative Deal on Unprecedented Performance Compensation (Comprehensive)

Special Management Performance Bonus Introduced for Semiconductor Division... Entirely Paid in Company Stock

Foreign Media Report Urgently: "Global Supply Chain Concerns Eased"

The management and labor union of Samsung Electronics have reached a tentative agreement on the introduction of an unprecedented and bold performance-based compensation system. With a plan to allocate more than 10% of business performance as a fixed pool for bonuses, employees in the semiconductor (DS) division could now receive up to 600 million won in bonuses based on an annual salary of 100 million won. Even the non-memory division, which is expected to record a loss this year, is projected to secure compensation of around 16 million won.

According to industry sources on May 21, the management of Samsung Electronics and the joint bargaining labor union reached a '2026 Performance Bonus Tentative Labor-Management Agreement' the previous day at the Gyeonggi Employment and Labor Office in Suwon, Gyeonggi Province. After the second round of post-mediation failed, an unprecedented general strike was imminent, but with active intervention by the Ministry of Employment and Labor and the Central Labor Relations Commission, dramatic progress was made, and an agreement was reached in about six hours after negotiations resumed.

On the 20th, at the Gyeonggi Employment and Labor Office in Jangan District, Suwon City, Gyeonggi Province, Yeomyeonggu, Head of People Team at Samsung Electronics DS (Device Solutions - semiconductor business), and Choi Seungho, Chairman of the Samsung Electronics Branch of the Samsung Group Supra-Enterprise Labor Union, shook hands after signing a tentative agreement following the Samsung Electronics wage negotiations. Photo by Yonhap News

New 'Special Business Performance Bonus' for DS Division... Bold Removal of Bonus Cap

The most notable feature of this agreement is the establishment of a new ‘Special Business Performance Bonus’ for the DS division, while maintaining the existing Over-Profit Incentive (OPI) system. This special bonus is funded entirely by 10.5% of the business performance agreed upon by labor and management, and there is no upper limit (cap) on the payout rate, enabling unlimited rewards based on performance.

The bonus pool will be distributed with 40% allocated to the entire DS division and 60% to each individual business unit. For shared functions such as HR and accounting, the payout rate is set at 70% of the payout rate for the memory division.

If the business performance criteria agreed by labor and management are applied to Samsung Electronics’ projected operating profit of approximately 300 trillion won for this year, the special business performance bonus for semiconductors alone would amount to a total pool of 31.5 trillion won. Based on this, the common pool for the DS division (40% of the total, about 12.6 trillion won) will first be distributed to all 78,000 employees, ensuring that, regardless of whether their business unit is in profit or loss, each employee will secure approximately 16 million won.

The remaining 60% of the pool (about 18.9 trillion won) will be divided between the memory division (about 28,000 employees) and shared functions (30,000 employees) at a ratio of 1 to 0.7. This means memory division employees will receive an additional 38 million won per person, and shared functions employees will receive about 27 million won more. As a result, a memory division employee could receive a total bonus approaching 600 million won when combined with the existing OPI (about 50 million won for a 100 million won annual salary).

Protective Measures for Sale of Company Shares... 10-Year Conditional Application Based on Operating Profit

However, the special business performance bonus will be paid entirely in the form of company shares after taxes. There will be a time lag in selling these shares: only one-third can be sold immediately after payment, while the remaining two-thirds are subject to restrictions, with one-third locked for one year and the other third for two years.

Business units recording losses this year may not be eligible for OPI, but for the special business performance bonus, they are guaranteed 60% of the common payout rate calculated from the division’s pool. However, labor and management agreed to implement this for loss-making units starting with 2027, deferring the application by one year.

This special bonus system is planned to be applied for the next 10 years. However, it will not be paid unconditionally and is subject to high performance criteria. From 2026 to 2028, the DS division must achieve an annual operating profit of 200 trillion won each year; from 2029 to 2035, an annual operating profit of 100 trillion won is required. In addition, for employees at the CL4 (manager) level, the payout rate will be adjusted based on individual performance evaluations.

Average Salary Increase of 6.2%... Significant Enhancement of Welfare and Mutual Growth Initiatives

In addition to bonuses, there was significant progress in salary and welfare benefits. This year’s average salary increase rate was set at 6.2% (base increase rate 4.1%, average performance increase 2.1%), and both the salary increase and the raise in salary caps by rank will be applied retroactively to March salaries. For salary caps, CL4 is raised to 130 million won (regardless of development or non-development roles), CL3 to 110 million won, and CL2 to 80 million won.

Welfare benefits include a new in-house housing loan program to support the housing stability of union members without their own homes. Childbirth allowances have been significantly increased, with 1 million won for the first child, 2 million won for the second, and 5 million won for the third child and beyond. In addition, for union members who work on designated shifts during holidays, compensation has been improved to include an additional four hours of the standard hourly wage.

Employees in the DX division, which handles finished products, and the CSS business team will each receive company shares worth 6 million won as an encouragement and to promote mutual growth. Labor and management also agreed to swiftly establish and announce plans for creating funds and specific operations to support the shared growth of partner companies, community contributions, and industrial safety.

This tentative agreement will become legally binding if it is approved by a majority vote of union members in a forthcoming vote.

This content was produced with the assistance of AI translation services.