The Day After SK Hynix’s Tentative Labor-Management Agreement
Official Letter Delivered to Executives... Attempt to Spark Public Debate on Bonus Reform
"Company Clings to Black Box Bonus System... EVA Remains Opaque"
The Samsung Group Inter-Company Labor Union, which represents the unions of five Samsung affiliates, sent an official letter on September 2 to Chairman Lee Jae-yong of Samsung Electronics and other executives, demanding improvements to the performance-based bonus system. This move appears to leverage the recent decision by SK Hynix, a competitor in the memory sector, to revise its bonus structure through a tentative labor-management agreement, in an effort to bring Samsung's own bonus system into public discussion.
According to industry sources on the same day, the Samsung Group Inter-Company Labor Union delivered the letter, titled "Outdated Performance Bonus System and an Unchanging Company," to Chairman Lee, Jun Young-hyun, Vice Chairman and Head of the Device Solutions (DS) Division at Samsung Electronics, and Roh Tae-moon, President and Acting Head of the Device Experience (DX) Division at Samsung Electronics.
This action came a day after SK Hynix's labor and management reached a tentative wage agreement for 2025, which includes abolishing the cap on the Performance Sharing (PS) bonus and paying 10% of operating profit as bonuses.
In the letter, the Inter-Company Labor Union pointed out, "SK Hynix recently finalized the 'payment of 10% of operating profit as bonuses' through a labor-management agreement," and argued, "In contrast, Samsung Electronics still adheres to a performance bonus system based on the non-transparent Economic Value Added (EVA) method."
The letter continued, "The EVA-based standard can only be described as a 'black box bonus system' that no employee understands how to calculate," adding, "Although the company has operated a task force for performance bonus improvements and held several meetings, there have been no subsequent announcements or results."
Currently, Samsung Electronics and its affiliates use the EVA method as the calculation basis for the annual performance bonus system, known as the Over-Performance Incentive (OPI, formerly PS), which is based on annual operating profit. EVA is calculated by subtracting capital costs (such as corporate tax and investment expenses) from operating profit. There are concerns that even if the absolute figure for operating profit is large, the EVA can be low if costs are high. Since the company does not disclose the specific EVA figures to employees, questions about this method have been consistently raised.
The Inter-Company Labor Union stated, "(With the EVA method,) even if operating profit is high, if a certain target is not met, the bonus could be zero, and there is also a cap," urging, "The morale of Samsung Electronics employees and their trust in the company have already hit rock bottom. At the very least, show some willingness to change."
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