SEOUL, June 24 - Samsung Electronics is preparing a share buyback program with a value of 90 trillion won, following an agreement to award employees bonuses in the form of company stock, the Yonhap News Agency reported.
According to unnamed industry sources cited by Yonhap, the memory-chip maker will make a formal announcement outlining the specifics of the repurchase plan in the near term. The reported buyback comes after management and the union reached a pay agreement last month that includes stock bonuses for employees within the chip division.
Under the terms of that pay deal, Samsung is expected to designate about 10.5% of its operating profit as special bonuses for the chip business, delivered as company shares. Yonhap reported that the total cost of those bonuses is estimated at 154 trillion won once taxes are factored in, with taxes representing about 40% of the calculated expense.
Details on the mechanics of the employee awards were also reported. Workers granted treasury shares under the bonus will be able to sell one-third of those shares immediately. The next third will be subject to a one-year holding period before sale is permitted, and the final third will require an additional year-long wait.
The report includes an exchange-rate reference of $1 = 1,535.6000 won.
This planned buyback and the structure of the stock bonuses have been highlighted in the report as raising questions about internal equity, given the concentrated allocation of special bonuses to the chip division. The company is expected to release the full parameters of the repurchase program shortly, according to the industry sources quoted.
What we know
- Samsung Electronics is reported to plan a 90 trillion won share buyback.
- The buyback follows a pay deal that awards special bonuses in stock to employees of the chip division, with about 10.5% of operating profit earmarked for those bonuses.
- The total estimated cost of the bonuses, including taxes of roughly 40%, is reported at 154 trillion won. Employees will face staged sale restrictions on treasury shares received as bonuses.