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Samsung SDS scraps stock bonus plan after failing to gain majority employee support
🇰🇷 South Korea /Economy & Trade

Samsung SDS scraps stock bonus plan after failing to gain majority employee support

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Official statement New plan
  • Samsung SDS will not proceed with its plan to convert cash bonuses into company stock due to insufficient employee support.
  • While 71.9% of participating employees voted in favor, the overall approval rate fell short of the required majority of all employees.
  • The company's labor union, recently formed, had opposed the plan, citing concerns over potential impacts on employee rights and working conditions.

Samsung SDS has decided not to implement its proposed personnel system reform that would have converted cash bonuses into company stock. The decision comes after the plan failed to secure the required majority of employee support in a recent vote.

Out of the total workforce, 55.6% participated in the vote. Among those who voted, 71.9% expressed their approval for the reform. However, when calculated against the entire employee base, the overall approval rate did not meet the necessary threshold of a majority of all employees.

The proposed reform aimed to abolish cash performance bonuses and instead issue company stock, with the amount based on 20% of an employee's annual salary. The payout could have been multiplied up to two times, depending on market indicators such as year-on-year pre-tax profit growth, stock performance, and the company's stock price relative to the IT services industry. Samsung SDS had explained that the goal was to increase compensation transparency through public metrics.

The company announced, 'As the majority consent requirement of all employees was not met for the system's implementation, it has been decided that this personnel system reform will not be implemented.'

— Samsung SDSIn a notice to employees regarding the decision not to proceed with the reform.

However, some employees raised concerns that the compensation would be tied to market variables like stock prices rather than individual performance. Additionally, they worried that the elimination of cash incentives would affect the calculation basis for severance pay. These concerns contributed to the opposition against the reform.

The formation of Samsung SDS's first-ever labor union, established on July 6, further complicated the situation. The union had actively campaigned against the reform, demanding a halt to the new system and joint discussions on working conditions and institutional changes. With the reform's failure, future discussions on the compensation system are expected to move to the negotiation table between the company and the union.

The reform plan has the potential to infringe upon the rights and dignity of union members.

— Samsung SDS UnionIn a statement outlining their opposition to the proposed changes.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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