Samsung to offer stock compensation to employees

Seoul, Oct 14
Samsung Electronics Co. said Tuesday it plans to offer shares to its employees under a new compensation program after the company was expected to have posted market-beating earnings in the third quarter.

The South Korean tech giant made the announcement to employees, noting that it will implement a performance stock units (PSU) program, under which workers will receive higher compensation depending on Samsung's stock performance, reports Yonhap news agency.

The notice came after Samsung Electronics released an earnings guidance earlier in the day, suggesting it expects an operating profit of 12.1 trillion won ($8.5 billion) for the quarter ending in September, which would mark a 31.8 per cent spike from the 9.18 trillion won tallied a year earlier.

It would also mark the largest quarterly earnings since the second quarter of 2022, when the company posted a 14.1 trillion-won operating profit.

Under the PSU program, Samsung will allocate 200 to 300 shares to each of its employees depending on their career level, with the exact amount to be determined based on the company's stock performance on the main index. The shares will be distributed over a three-year period starting in 2028.

For example, if Samsung shares rise between 40 per cent and 60 per cent from Wednesday to October 13, 2028, employees will receive the full 200 or 300 shares.

If Samsung shares rise from 60 per cent to 80 per cent, the number of shares granted will increase 1.3 times, and 1.7 times if the stock climbs over 80 per cent but below 100 per cent.

The number of shares will double if Samsung's stock price grows twofold or more.

The plan contrasts with the existing excess profit incentive (OPI) system, under which bonuses are calculated by deducting certain costs, such as taxes and investment spending, from operating profit.

Additionally, Samsung Electronics decided to allow employees to receive part of their OPI bonuses in shares instead of cash.