For the first time in its history, Samsung Electronics will pay a portion of its executives' performance bonuses in company stock as part of efforts to strengthen accountability management. If the stock price falls one year after the bonus agreement, the actual number of shares granted will be reduced.
Samsung Electronics announced on Friday that it had notified employees of its decision to distribute part of this year's overall performance incentives (OPI) to executives in the form of company stock. The OPI is a performance bonus awarded to employees at the beginning of the following year if annual management performance exceeds targets. This year's bonus is scheduled for payment next Friday.
Under this policy, vice presidents will receive at least 50 percent of their bonuses in stock, executive vice presidents at least 70 percent, presidents at least 80 percent, and registered executives at 100 percent. These shares will be granted in January of the following year, and executive vice presidents or lower cannot sell the stock for one year after receipt, while presidents face a two-year restriction. Effectively, the holding period extends to two years for vice presidents and executive vice presidents and three years for presidents from the payment agreement date.
Notably, if the stock price drops one year after the agreement was made, the number of shares granted will decrease proportionally. For instance, if the stock price declines by 10 percent over the year, executives will receive only 90 percent of the initially agreed share quantity.
"This measure aims to clarify executives' work objectives and strengthen accountability management," Samsung Electronics explained. "By directly linking executive bonuses to stock performance, the company seeks to expand shareholder-focused management practices by emphasizing not only operating profit and business performance but also stock price management."
Do-Young Kwak now@donga.com