Samsung Electronics Nears Announcement of Up to 90 Trillion Won Share Buyback Plan; Stock Price Impact in Focus

Samsung Electronics will unveil specific details next month regarding a plan to repurchase up to 90 trillion won worth of its own shares over the next three years. This is to secure treasury stocks needed for special management bonuses and Performance Stock Unit (PSU) programs to be paid to employees. The 90 trillion won figure being discussed in the market is an estimate based on projected performance and the current stock price over the next three years.

Samsung Electronics' labor and management have agreed to pay 10.5% of operating profit over three years as special management bonuses for employees in the semiconductor division. Assuming KB Securities' estimates of 37.5 trillion won in operating profit this year and 54.8 trillion won next year, with similar levels projected for 2028, the cumulative operating profit over three years would reach 147.1 trillion won. Applying this, the bonuses for three years are estimated at approximately 15.4 trillion won, and after deducting about 40% for taxes, the actual stock value to be paid to employees is estimated to be around 9.3 trillion won.

An additional pool of shares will also need to be secured for the payment of Performance Stock Units (PSUs). Last year, Samsung Electronics introduced its PSU system, pledging to grant 200 or 300 shares to 128,000 employees based on their rank. The number of shares to be paid increases based on the stock price appreciation up to the evaluation date, and if the current stock price is maintained and the maximum payout multiplier of 200% is applied, the required treasury stock is estimated at about 70.58 million shares, or approximately 22 trillion won in value.

Samsung Electronics is considering a share buyback plan of up to 90 trillion won over the next three years to cover special management bonuses and PSU payments, and analysis indicates that an additional repurchase of approximately 90 trillion won will be necessary beyond its current treasury stock holdings. This amounts to a volume of about 290 million shares over the next three years. This scale is approximately three times the total amount of treasury stock repurchased for shareholder value enhancement over the past decade, which was 30.7 trillion won.

If the large-scale open market share buyback plan, potentially reaching up to 90 trillion won, is realized, it is expected to positively influence the mid- to long-term supply and demand dynamics of Samsung Electronics' stock price by absorbing market sell-offs and reducing the number of shares in circulation, while also serving to prop up the stock price during downturns.