'Samsung to Allow Employees to Choose Performance Bonuses in Company Stock... Executive Mandatory Stock Rule Abolished'

Notice of 2025 OPI Stock Compensation Plan
Expanded Scope of the System: Same Standards for All Employees and Executives
Up to 50% of OPI Can Be Received in Company Stock
Option to Receive Entire Bonus in Cash Instead of Stock
OPI Scheduled fo

Samsung Electronics has decided to abolish the regulation that required executives to receive at least 50% of their performance bonuses in company stock. Instead, the company will expand the system to allow employees, like executives, to choose to receive a portion of their bonuses in shares.

Samsung Electronics Seocho Building. Photo by Yonhap News

According to the business community on January 12, Samsung Electronics recently announced changes to its performance incentive (OPI) stock compensation plan. The new policy expands the stock-based bonus system, previously limited to executives, to all employees.

The core of the new policy is that stock-based performance bonuses will be applied to all executives and employees under the same standards. Accordingly, employees and executives can now choose to receive 0% to 50% of their OPI bonuses in company stock, in 10% increments. If they wish, they can also opt to receive the entire amount in cash instead of shares. Those who choose to hold the shares for one year are eligible to receive an additional 15% of the selected amount in stock as an advance. The OPI, calculated based on last year's performance, is scheduled to be paid on January 30.

Previously, in January last year, Samsung Electronics introduced a stock-based performance bonus system for executives, requiring executive directors to receive at least 50%, vice presidents at least 70%, presidents at least 80%, and registered executives 100% of their bonuses in company stock to be received after one year. The system also stipulated that if the stock price increased after a year, the agreed number of shares would be delivered as promised, but if the price fell, the number of shares would be reduced in proportion to the decline.

This announcement is interpreted as a decision to expand the system. The business community believes that improved performance and a sharp rise in the stock price over the past year are the main reasons behind this move. However, some point out that making the stock bonus option voluntary, rather than mandatory for executives, could undermine one of the original rationales for the policy-responsible management.

In response, Samsung Electronics stated that, in addition to the OPI, it operates other stock-based performance compensation systems to strengthen responsible management among employees and executives. In October last year, the company introduced the Performance Share Unit (PSU) system, which varies the number of shares awarded based on the stock price increase. Under this system, if the stock price rises less than 20% over three years, no shares are awarded, but if it rises by 100% or more, twice the number of shares are granted.