Samsung Implements New Strategy: Linking Employee Bonuses to Stock Performance

January 20, 2025 – Samsung Electronics, the South Korean technology giant, is navigating through one of the most challenging periods in its history. The company has seen a significant decline in its share price over the past six months, primarily due to issues within its memory and semiconductor chip business. In response to this predicament, Samsung is embarking on a new initiative that could potentially alter its destiny – linking employee bonuses to the performance of the company’s stock.

According to a report by TechInAsia, Samsung intends to tie a portion of employees’ annual bonuses to the performance of its shares. It is understood that the stock component will account for 50% to 100% of the annual bonus, with this proportion gradually increasing based on the employee’s seniority. Traditionally, Samsung’s bonus compensation has been primarily distributed in cash. However, under the new policy, if the company’s performance suffers, employees will receive fewer shares, and the value of those shares will also diminish as the stock price declines.

Furthermore, the report states that Samsung will restrict employees’ ability to sell the acquired shares within 1 to 2 years, depending on their level. This new bonus compensation method is set to be implemented this month, initially only for executive-level employees. Non-executive employees are expected to be included in this system from 2026 onwards.

Samsung currently faces multiple challenges, with the most significant issue being the performance of its semiconductor business. Despite investing billions of dollars over the past few years, Samsung has struggled to catch up with Taiwan Semiconductor Manufacturing Company (TSMC) in the wafer foundry segment. The company has encountered setbacks at the 4-nanometer and 5-nanometer process nodes, resulting in the loss of some key customers.

Once regarded as the world’s leading memory chip manufacturer, Samsung has gradually lost its edge in recent years, with competitors such as Micron and SK Hynix gaining ground. Its HBM3 and HBM3E products have been facing overheating issues, preventing large-scale supply to Nvidia, one of the most important AI chip companies globally.

It’s worth noting that recent reports indicate Samsung’s smartphone division has decided to procure Micron’s LPDDR5X DRAM chips for the upcoming Galaxy S25 series, rather than relying entirely on DRAM chips produced by Samsung Semiconductor.

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