[Exclusive] Samsung Electronics Significantly Cuts Performance Bonuses... '22~38% of Annual Salary'

[Image source=Yonhap News]

[Asia Economy Reporters Hyewon Kim and Changhwan Lee] The management performance bonuses received by Samsung Electronics employees have sharply shrunk to about 20-30% of their annual salary. This is due to a significant reduction in bonus size following last year's poor performance.

According to industry sources on the 29th, Samsung Electronics plans to pay up to 38% of the annual salary as Excess Profit Incentive (OPI, formerly PS) by business division. OPI is Samsung's unique and exceptional bonus system that pays up to 50% of the annual salary within a 20% limit of profits exceeding the yearly set management targets.

By business division, the Network Business Division is set at 38% of the annual salary, the Visual Display Business Division 38%, the Semiconductor Business Division 29%, the Wireless Business Division 28%, and the Home Appliance Business Division 22%.

This year's OPI has significantly decreased compared to last year. Samsung Electronics achieved record-high performance in 2018 and paid the largest-ever OPI at the end of January last year. The Semiconductor Business Division received 50% of the annual salary, while the Wireless Business Division, Visual Display, and Network Business Divisions received 46% of the annual salary. However, as last year's performance declined, the current OPI payment scale has been greatly reduced.

Samsung Electronics' sales last year were 229.52 trillion KRW, and operating profit was 27.71 trillion KRW, down 5.8% and 52.9% respectively from the previous year. The annual operating profit falling to the 20 trillion KRW level is the lowest performance in four years, since 2015. The main reason is the semiconductor business, which contributed to the record performance, suffering due to a drop in DRAM prices. The Display and Wireless Business Divisions also reportedly fell short of expectations.

In August last year, Samsung Electronics announced internally that the OPI for major business divisions such as Semiconductor and Wireless could be decided between 20-30%.