Shareholders of Samsung Electronics announced Wednesday they will file an invalidity lawsuit against the company's operating-profit-linked bonus scheme [1].
The legal challenge highlights a growing conflict between labor demands for transparent, profit-sharing rewards and investor concerns over corporate sustainability. Shareholders said that these payment structures reduce the company's ability to invest in future technologies and diminish overall competitiveness [1].
At the center of the dispute is the practice of tying a specific percentage of operating profit to the employee bonus pool. Samsung Electronics tied 10.5% of its operating profit to this pool [2]. This mirrors trends seen at other semiconductor firms; for example, SK Hynix used 10% of its operating profit as the source for performance bonuses in 2021 [3].
Investors said that these "N% profit-linked bonus" demands could spread across the broader South Korean corporate sector [1]. They said that such a trend creates an unsustainable financial precedent. The scale of these bonuses can be significant — one employee at SK Hynix received a bonus of about 15 million KRW on a base salary of 100 million KRW [4].
Some projections suggest these figures could escalate further. In certain scenarios, a projected bonus for the same employee next year could exceed 600 million KRW [5]. Shareholders said that diverting such massive sums to bonuses limits the capital available for research and development, a critical factor in the volatile chip market [1].
The group of shareholders said the current scheme is invalid because it prioritizes short-term employee gains over the long-term health of the company [1].
“Shareholders argue that tying large bonuses to operating profit harms shareholder value.”
This lawsuit represents a fundamental clash between the 'labor-centric' and 'capital-centric' views of corporate governance in South Korea. If the court finds the bonus scheme invalid, it could force Samsung and other tech giants to decouple employee incentives from direct operating profit percentages, potentially altering how the industry attracts and retains talent during periods of high profitability.
