Group Says Labor-Management Deal May Infringe Shareholder Rights
Samsung Electronics headquarters (Business Korea DB)
Samsung Electronics shareholders have strongly protested and signaled legal action against the provisional wage negotiation agreement centered on performance bonuses reached by labor and management. The intent is that the act of determining the company’s profit distribution structure solely through a labor-management agreement infringes upon the property rights of the shareholders.
The shareholder group, the Korea Shareholder Movement Headquarters, held a rally near the residence of Samsung Electronics Chairman Lee Jae-yong in the morning on May 21 and argued the illegality of the provisional labor-management agreement. They emphasized that the agreement to calculate and allocate 12% of the pre-tax operating profit as performance bonuses is legally null and void as it did not go through the resolution process of the general meeting of shareholders.
The group made it clear that the company’s operating profit is a core element directly connected to the interests of all shareholders. The analysis is that structuring the distribution of this solely through an agreement between labor and management not only violates the principle of capital maintenance under the Commercial Act but also has a high potential to directly infringe upon shareholder rights.
The Shareholder Movement Headquarters plans to immediately file a lawsuit to confirm nullity if a resolution of the board of directors is proposed to ratify or execute the provisional agreement in the future. Furthermore, they are showing their intention to block the implementation of the agreement by mobilizing practical legal measures, such as exercising a provisional injunction based on the right to demand cessation of illegal acts.
Previously, Samsung Electronics labor and management had reached a provisional agreement on wages and collective bargaining, with the reorganization of the performance bonus system as its core, just before going on a general strike. It was confirmed that the agreement included the payment of performance bonuses at a total level of 12%, including the Overall Performance Incentive (OPI) and special management performance bonuses.
This agreement is scheduled to be finally confirmed only if it passes the vote by union members, which will be held starting on May 22. However, as collective backlash from shareholders and the possibility of legal disputes have been raised, it is expected that there will be considerable friction until the final execution of the labor-management agreement.
Jung Min-hee
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