Samsung, SK Hynix Pledge to Increase Shareholder Returns

Samsung Electronics and SK Hynix, two of South Korea's largest semiconductor manufacturers, have signaled intentions to improve returns for their shareholders. In a statement to Reuters, Samsung Electronics indicated it is exploring ways to "sustainably" increase shareholder returns, with specific details expected "soon."

The company noted that while maintaining a robust balance sheet to manage industry cyclicality and fund growth remains a priority, it is actively investigating sustainable methods for enhancing shareholder returns. SK Hynix concurrently stated its plan to present a concrete shareholder return scheme by year-end, which is anticipated to "significantly increase shareholder returns," citing its record cash flow generation capabilities.

These announcements come amid a lawsuit filed by a shareholder group against the CEOs of Samsung Electronics and SK Hynix. The group alleges breaches of fiduciary duty, particularly concerning the distribution of performance bonuses to employees. The core of the allegation is that company assets were improperly utilized during negotiations for these employee bonuses.

The shareholder group contends that performance bonuses should be subject to shareholder approval, rather than being solely determined through labor-management negotiations. Under a May agreement, Samsung will pay semiconductor performance bonuses equivalent to 10.5% of operating profit. SK Hynix operates a profit-sharing system, allocating 10% of its semiconductor division's operating profit to employees as bonuses.