Samsung and LG Subsidiaries Vary Greatly
Samsung MX Offers Over 50% Bonus on Annual Salary
LG Electronics H&A Division Up to 665% of Base Salary
The scale of performance bonuses among major conglomerates varies significantly depending on industry conditions and business results, causing mixed feelings among employees. While companies that achieved record-high sales paid out performance bonuses exceeding 600%, those hit hard by the recession did not receive any bonuses, resulting in contrasting expressions.
According to the industry on the 4th, Samsung Electronics paid out the business unit-specific Over-Profit Incentive (OPI) on the 31st of last month. OPI, along with the Target Achievement Incentive (TAI), is one of Samsung Electronics' representative performance bonus systems. If a business unit's performance exceeds the target set at the beginning of the year, up to 20% of the excess profit is paid once a year, with a maximum of 50% of the individual's annual salary.
The business unit that received the highest performance bonus was the MX division, responsible for smartphones. The MX division, which led the company's overall performance last year due to strong flagship smartphone sales, received an OPI equivalent to 50% of the annual salary. Last year, the MX division's OPI payout rate was 37%. The VD division's OPI payout rate jumped from 24% last year to 43% this year. This improvement was thanks to enhanced profitability through high-value products such as Neo QLED and Organic Light Emitting Diode (OLED) TVs, despite a global decline in TV demand.
On the other hand, the DA division, responsible for home appliances, and the medical equipment division had payout rates of only 12%, a slight increase from 7% the previous year. The network division's payout rate dropped from 27% last year to 12% this year.
The DS (Device Solutions) division, responsible for semiconductors, which used to receive about 50% of their annual salary as performance bonuses, received 0% this year due to losses caused by the memory semiconductor downturn last year. Samsung Electronics recorded losses of approximately 15 trillion won in the semiconductor division through the fourth quarter of last year.
Samsung affiliates also experienced mixed results. Samsung Display's OPI across all business units was about 48% of the annual salary. Samsung SDI received OPIs of 32% for batteries, 18% for electronic materials, and 28% for headquarters (support organizations).
In contrast, Samsung Electro-Mechanics' OPI was only about 1% of the annual salary. For example, a new employee at Samsung Electro-Mechanics received roughly 500,000 won as a year-end performance bonus. This is a significant decrease compared to last year's OPI of 18%.
SK Hynix recorded an operating loss of 7.7303 trillion won last year but decided to pay a consolation bonus of 2 million won and 15 shares of company stock. This was because they succeeded in turning a quarterly profit in the fourth quarter of last year. Considering SK Hynix's recent stock price in the mid-130,000 to 140,000 won range, employees are expected to receive approximately 2 to 2.1 million won. SK Hynix also paid a Production Incentive (PI), which is given when the company meets its production targets semiannually, amounting to 50% of the base salary on the 26th.
LG also showed significant differences among its affiliates. LG Electronics, which recorded its highest sales for three consecutive years, paid performance bonuses up to 665% of the base salary to members of the H&A Business Division, responsible for home appliances. The H&A Business Division, which recorded sales of 30.1395 trillion won last year and solidified its position as the global number one in home appliances, surpassing competitor Whirlpool, paid management performance bonuses ranging from 445% to 665% of the monthly base salary (1/20th of the annual salary) depending on the business unit.
By division, the Living Solutions Business Unit, which secured the global number one market position in washing machines, received the highest performance bonus at 665%. The VS Business Division, responsible for automotive components, received 455%, the HE Business Division, handling TVs, received between 200% and 300%, and the BS Business Division, which handles B2B transactions, was allocated between 135% and 185%.
LG Innotek also decided to pay performance bonuses up to 240% of the base salary this year. By business unit, the Optical Solutions Business Unit and the Electronic Components Business Unit received 240%, the Substrate Materials Business Unit 170%, and the Automotive Components Business Unit 150%. However, this year's performance bonuses are significantly reduced compared to one year ago. The payout rates by business unit at the beginning of last year were 705% for Optical Solutions, 584% for Substrate Materials, and 517% for Automotive Components.
In contrast, LG Energy Solution set this year's management performance bonus at 340% to 380% of the base salary, with an overall average of 362%. Due to deteriorating performance caused by a slowdown in demand for electric vehicles, last year's bonus was the highest among LG Group affiliates at 870%, but it has sharply decreased this year.
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