Seoul (South Korea)

Samsung Electronics is expected to increase treasury share buybacks to fund a special bonus for semiconductor employees under a tentative labour agreement reached to avoid a planned strike, according to a report by The Korea Herald on Thursday.

As per the report, the company has agreed to provide a semiconductor performance bonus equivalent to 10.5 per cent of business performance earnings. The bonus will reportedly be paid in treasury shares over the next 10 years without any cap.

The report said Samsung Electronics currently holds around 82 million common treasury shares, based on year-end disclosures and subsequent buybacks and sales. However, these holdings may not be enough to meet the proposed bonus payout requirements, leading to expectations of additional share buybacks.

According to market estimates cited in the report, if Samsung Electronics records cumulative operating profits of 300 trillion won (USD 200 billion) this year, the company may need to provide nearly 31.5 trillion won (approx. USD 21.5 billion) worth of treasury shares as bonuses to employees in its Device Solutions division, which includes memory chip operations.

The report further noted that Samsung Electronics' current treasury share holdings are valued at about 22.65 trillion won (approx.. USD 15.5 billion) based on Wednesday's closing price, which would fall short of the estimated bonus requirement.

Samsung Electronics has been retiring treasury shares in recent years to improve shareholder returns. This year alone, the company plans to retire around 87 million treasury shares in the first half, including 73 million common shares and 13.6 million preferred shares announced for cancellation on March 31, the report added.

With treasury share holdings expected to decline further after these cancellations, the report said concerns over management control and the need for additional buybacks are increasing.

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A Samsung Electronics official was quoted in the report as saying that the company would move to buy back shares if necessary.

Samsung Electronics shares were trading at 295,000 won (approx. USD 204) on KOSPI at 12:20 p.m., up 6.97 per cent from the previous session, according to the report.