Samsung Electronics plans to pay executives not only excess profit incentives (OPI) but also long-term incentives (LTI) in company stock.
According to the industry on the 30th, Samsung Electronics is known to be pursuing a plan to pay some of the LTI in company stock to executives. The LTI is a program that distributes rewards based on management performance over the past three years to executives who have worked for more than three years.
This is interpreted as a move to strengthen accountable management and enhance shareholder value in response to the crisis Samsung Electronics faces and the continued decline in stock prices.
Earlier this year, it was decided for the first time since the introduction of OPI to pay some of the OPI to executives in company stock. OPI pays up to 50% of an individual’s annual salary once a year, limited to 20% of excess profits when the performance of the affiliated business division exceeds the targets set at the beginning of the year, and is considered one of Samsung Electronics' representative performance-based compensation systems, alongside the target achievement incentive (TAI).
The senior executive chose more than 50% of the performance bonus in company stock, the vice president chose more than 70%, the president chose more than 80%, and registered executives chose 100% in company stock, and the amount of company stock was granted accordingly.
In particular, it was arranged that if the stock price falls after the agreement is signed, the number of shares payable will decrease correspondingly. This is interpreted as an intention to strengthen stock price management while directly linking executive performance bonuses to stock prices, thus expanding a shareholder-friendly management policy beyond just operating profit and other management performance metrics.
Samsung Electronics revealed its intention to support stock prices by announcing in November last year that it would buy back a total of 10 trillion won worth of company stock over the course of a year to enhance shareholder value. The stock price is still showing a sluggish trend around 50,000 won.