Samsung Group Realigns Units Considers Cost of Top Salaries

Samsung Group

Reporting from Seoul on April 7 suggests that the Samsung Group is in the process of realigning its units and considering the cost of the top salaries paid top executives. Failure to disclose these numbers, according to a corporate consulting firm, has added further to the already significant public protest over apparently excessive profits. EFC examined the 2013 annual reports released by South Korea’s biggest corporations.   Details about Samsung and SK groups show that directors earn more in bonus than salary, while at Hyundai Motor and LG, wages are the principle mode of compensation.

Samsung Group is the largest conglomerate  or chaebol owned by a family, in the country. Samsung Electronics Co., its subsidiary is largest manufacturer worldwide of cell phones. Hyundai Motor, LG and SK are the other four chaebols in this complex corporate landscape.  SK owns SK Telecom, the country’s largest mobile phone network. The salaries of 49 Samsung directors were disclosed, and for them the average salary was $1.57 million. Bonuses and other benefits total 64 percent of the total compensation given to this group.

As Samsung Group starts to realign its units, consultants give careful consideration to the cost of top salaries. Samsung Group is the only one of the chaebols that reveals its guidelines on bonuses compensation.  According to South Korean regulatory rules, disclosure of pay details for registered directors is not required.  Only the total salary for each is submitted for approval to shareholders.

Meanwhile Samsung Group seeks corporate restructuring to reduce the dominant role played by Samsung Electronic, which accounted for approximately 75% of the conglomerates revenues in 2013. Competition continues to grow in the technology sector, and the chaebol has expressed significant concerns about that degree of dependence in this volatile industry. Samsung General Chemicals will merge with Samsung Petrochemical. Cheil Industries, which produces textiles and chemicals and has a fashion label, will be absorbed by Samsung SDI. In 2013 Cheil was taken over by Samsung Everland, an amusement park company which spun-off its food services division.

Samsung Electronics announced on its website the scheduled release date of its Chromebook 2 in mid-April. This beats expectations set in March for general release in mid-May. This updated model will come in two screen sizes, 11 and 13 inches, with leather trim and details that have impressed reviewers. The cost remains similar, $399, and overall the Chromebook 2 has comparable features. Budget laptop buyers have brought high sales numbers for the earlier model. Inside the Chromebook 2, it carries Samsung’s own Exynos 5 Octa chip. The larger 13-inch model has 4GB of RAM compared to the smaller version with 2GB. Reviewers felt that its storage capacity of 16GB to be a bit skimpy. The Chromebook 2 is being marketed extensively to educational users. The new Chromebooks consider the classroom environment, with a remarkable fanless design to cut background noise. The screen’s anti-glare qualities lower reflection of incident light from overhead lights and open windows.

As Samsung Group realign units, managers consider carefully the cost of top salaries. The market for user-friendly and particularly child-friendly electronics grows, and the features on the Chromebook 2 are particularly interesting for consumers. “Easy grip” provided by the soft leather and flashy stitching is a big marketing point. Of course the attention to the needs of the budget-conscious family also play a role in the marketing campaign.

Commentary by Lawrence Shapiro

Smart Company
Global Post

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