The ‘Excess Profit Incentive, overall performance incentive (OPI, formerly PS)’ of the DS division, which is in charge of Samsung Electronics’ semiconductors, was set at 0%. It seems that it was difficult to pay performance bonuses as an unprecedented deficit of 13 trillion won was expected this year due to the ‘semiconductor cold wave’.
According to the industry on the 28th, Samsung Electronics announced the ‘2023 OPI expected payment rate’ on this day. The DS division, which recorded a serious deficit this year, came out to 0% as expected. Samsung Electronics plans to make the final payment after disclosing the ‘OPI confirmed payment rate’ in late January next year.
OPI, along with ‘Target Achievement Incentive (TAI, formerly PI)’, is Samsung Electronics’ representative performance bonus system. When the performance of the affiliated business unit exceeds the target set at the beginning of the year, up to 50% of the individual's annual salary is paid once a year within a limit of 20% of excess profits.
Previously, Samsung Electronics DS received the maximum OPI of 50% consecutively last year (for 2021) and early this year (for 2022). Although the semiconductor cold wave began in the second half of 2021, it was possible because the target operating profit was achieved in the first half of last year.
But things are different this year. This is because the deficit situation has become more serious. This year, the DS division alone suffered a cumulative operating loss of 12.69 trillion won in the first to third quarters. Although the deficit is gradually decreasing, a deficit of about 770 billion won is expected in the fourth quarter, and a deficit of more than 13 trillion won is expected to occur this year.
This trend was already detected in the TAI paid out on the 22nd. TAI pays up to 100% of the basic monthly salary once a year in the first and second half of the year, taking performance into account. The DS division received 100% of TAI until the first half of last year, but it was cut in half (50%) in the second half of last year due to poor performance.
In the first half of this year, the amount was halved to 25%, and in the second half of the year, it was cut in half again to 12.5%. Even this only applies to the memory division. Foundry (semiconductor consignment production) and system LSI recorded 0%. This is the lowest scale ever eight years after the implementation of the TAI system.
Samsung Electronics employees, who have received the highest OPI over the past few years, look depressed. Considering that the starting salary in the DS division is around 53 million won per year, if you receive the maximum OPI, up to 26.5 million won will be in your bank account at the beginning of the year. OPI accounts for one-third of income, so it is also called ‘real performance bonus’.
Meanwhile, there is also an atmosphere of expectation of encouragement money among employees. An employee of Samsung Electronics' DS division said, "I expected there would be no OPI because the deficit was so severe. However, I also have expectations that they will provide incentives to boost morale like their competitors."
At the end of 2021, Samsung Electronics paid up to 200% of monthly basic salary as a ‘special encouragement to overcome crisis’ to boost the morale of executives and employees at the group level. SK Hynix (000660) also paid 1.2 million won in ‘crisis overcoming encouragement’ instead of ‘Productivity Incentive (PI)’ in the first half of this year.
Source: Translated from Donga, News1 Seoul
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