Samsung Electronics is poised to significantly increase its treasury share buybacks. This strategic move aims to finance a substantial special bonus for its semiconductor employees, following a tentative labor agreement designed to prevent an impending strike, as reported by Herald Business on Thursday.
Details of the pending agreement reveal that Samsung will allocate a special semiconductor performance bonus. This bonus will amount to 10.5 percent of the company’s business performance earnings and will be distributed to employees in the form of treasury shares over a 10-year period, with no upper limit on the total payout.
Given that Samsung, the global chip giant, currently holds approximately 82 million common treasury shares (a figure derived from year-end disclosures, subsequent buybacks, and sales), the company will likely need to substantially expand its treasury share buybacks to adequately fund this new bonus pool, the report indicated.
Market estimates forecast Samsung Electronics to achieve a cumulative operating profit of 300 trillion won (approximately $200 billion) this year. Should these projections materialize, the company would be required to pay out an estimated 31.5 trillion won in treasury shares as bonuses specifically to its Device Solutions division, which encompasses critical memory operations.
Valued at 22.65 trillion won based on Wednesday’s closing price, Samsung Electronics’ existing 82 million common treasury shares are insufficient to cover the estimated bonus payout.
In recent years, Samsung Electronics has consistently retired its treasury shares, a strategy aimed at boosting shareholder returns and improving capital efficiency.
Furthermore, the company has already announced plans to retire approximately 87 million treasury shares in the first half of this year alone. This includes 73 million common shares and 13.6 million preferred shares, as detailed in a March 31 announcement regarding their cancellation.
When combined with these planned cancellations, Samsung’s total treasury share holdings are projected to decrease even further. This situation has sparked concerns regarding management control, making additional share buybacks seem increasingly inevitable to meet future obligations.
Reportedly, a Samsung Electronics official confirmed that the company is prepared to buy back additional shares should the need arise.
As of 12:20 p.m. on the day of the report, Samsung Electronics shares were trading at 295,000 won, reflecting a robust 6.97 percent increase from the prior trading session, likely in response to these developments.
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