The Korea Herald

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Samsung considers cutting staff incentives on sluggish sales

By 김영원

Published : Jan. 21, 2016 - 17:52

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 A sense of frustration seems to be pervading the halls of Samsung Electronics as incentives for the year 2015, dubbed the overall performance incentive, are anticipated to plunge due largely to its below-par business performance last year.

The OPI reward program pays up to 50 percent of the annual salaries of workers within the range of 20 percent of the firm’s excess profits.

The Samsung logo at Samsung Electronics’ head office in Seoul. (Yonhap) The Samsung logo at Samsung Electronics’ head office in Seoul. (Yonhap)

Samsung also runs their target achievement incentive program in which the employees, who are evaluated on a five-level grading system from the highest, A, to the lowest, E, receive up to 100 percent of their monthly salaries in the first and second half of the year.

The Seoul-based tech giant is scheduled to hand out the OPIs to its executives and employees on Jan. 29.

An employee of the smartphone unit of the firm said “a sense of unease is engulfing Samsung as the incentives for 2015 are rumored to decrease drastically and some departments are said to be unable to take home a cent”

The amount of the OPIs paid to each business unit of the world‘s largest smartphone-maker by sales differs based on their performance.

The employees of the firm’s flagship device solutions division, which operates memory and logic chip businesses, and information technology and mobile communications division for handsets, for example, received 50 percent of their annual salaries in incentives in January last year.

The tech giant’s consumer electronics and video display business units, on the other hand, received relatively low incentives at a 31 percent rate.

The information technology and mobile communications division was the biggest beneficiary of the OPI program for almost a decade, as its income, accounting for more than 50 percent of Samsung Group’s entire revenues, reached its peak with robust sales of handsets during the period.

Other Samsung Group affiliates, such as Samsung SDS and Samsung Electro-Mechanics, are usually left out of the bonus party

“Those in other units did not care much about the OPI, as they always got less or nothing, but I assume that those working at the mobile business unit would take the brunt of the bonus drop,” said a Samsung employee.

A market analyst said “it has been long forecast that the OPI will decline, or be flat, due to the Seoul-based tech giant’s ever-decreasing profits.”

Samsung is forecast to have earned 6.1 trillion won ($5.03 billion) in operating profit in the fourth quarter last year, down 17.46 percent compared to the previous quarter, with its fourth-quarter revenue standing at 53 trillion won, according to its earnings estimates earlier this month.

The company’s annual revenues are expected to exceed 200 trillion won last year, but the figure is on the downward path for the second consecutive year since it reached a record 228 trillion won in 2013.

The tech giant is slated to announce the 2015 earnings report on Jan. 28.

By Kim Young-won (wone0102@heraldcorp.com)