November 22, 2024

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[THE INVESTOR] Employees at Samsung Electronics' mobile business unit will take the brunt of the consequences of the Galaxy Note 7 fiasco as their annual incentives are likely to plunge due to decreased profits of the smartphone business this year.

Samsung runs the so-called OPI reward program that pays up to 50 percent of the annual salaries of employees within the range of 20 percent of the firm’s excess profits.

The Korean tech giant, scheduled to hand out the OPI incentives to its employees on Jan. 26, has decided to cut the incentive rate for the mobile business employees from 50 percent to 17 percent, according to news reports on Dec. 20. The cut is mainly due to the Note 7 recall which Samsung said would cost it more than 3 trillion won (US$2.5 billion) in the last quarter of this year and the first three months next year.

For the past six years, employees of the mobile business unit have been receiving incentives at the maximum rate of 50 percent -- the highest among Samsung units -- thanks to robust smartphone sales.

Workers at Samsung’s memory business unit, on the other hand, are expected to receive 50 percent of their salaries as bonus while the incentive rates for consumer electronics and display business units have been set at 7 percent and 48 percent, respectively.

Samsung also runs the so-called target achievement incentive, or TAI program, which provides employees up to 100 percent of their monthly salaries during the first and second half of every year.

Those working for the consumer electronics and chip business division are to receive the TAI bonus at a 50 percent rate while employees at the mobile business unit will receive 12.5 percent of their monthly wages.

The tech firm will offer the TAI bonuses to its employees on Dec. 23.

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