Samsung Heavy Industries Announces Performance Bonuses After 12-Year Hiatus
Samsung Heavy Industries (SHI) is set to distribute performance bonuses for the first time in over a decade, marking a significant turnaround for the company. This decision comes as SHI has reported improved financial results, attributed to a strategic shift away from low-priced orders towards securing high-value ship contracts. The Overall Performance Incentive (OPI) for this year has been established at 208% of the bonus base amount, which includes base salary and allowances. The bonuses are scheduled to be paid on the 30th of this month.
The OPI program is a key performance bonus initiative within the Samsung Group, designed to reward employees based on annual results. Unlike Samsung Electronics, which limits bonuses to 50% of an individual’s annual salary, SHI’s calculation method allows for a more substantial payout based on the combined base salary and allowances. This year, not only SHI employees will benefit; in-house partner company employees will also receive bonuses. Those with five or more years of service will receive the full 208%, while employees with three and two years of service will receive 80% and 70%, respectively.
Financial Recovery and Future Outlook
This marks the first OPI payment since the shipbuilding downturn began in 2014, which led to significant operating and net losses for SHI. The company faced challenges that halted bonus distributions from 2015 onwards. However, in 2023, SHI reported an operating profit for the first time in eight years, although it still recorded a net loss of 148 billion won, which prevented the payment of bonuses last year. The OPI is calculated using economic value added (EVA), which factors in corporate taxes and capital costs.
Last year, SHI improved its profitability by focusing on high-value vessels, including liquefied natural gas (LNG) carriers and offshore projects. Financial estimates suggest that the company’s annual operating profit reached approximately 873.9 billion won, with a net profit of around 666.6 billion won. This represents a significant increase from the previous year, where operating profit was 503 billion won and net profit was just 64 billion won.
The atmosphere within SHI has shifted positively, with employees expressing relief and optimism about the company’s future. Many employees had previously feared potential downsizing or sell-offs, making the return of performance bonuses a notable morale booster. Observers believe that the current trend of profitability will continue, as SHI has cleared most low-priced orders and has a robust order backlog valued at about 41 trillion won, ensuring work for over three years. Industry experts predict that increased construction volume and higher ship prices will further enhance SHI’s earnings quality in the coming years.
