Who truly owns Samsung Electronics? Is it the Lee Jae-moon family, the board of directors, the employees who generate profits, or the ordinary investors who hold shares in the company?
Korean retail investors are trying to bring this issue to the shareholders' meeting.
On August 4th, the South Korean retail investor rights platform ACT announced the launch of an electronic signature collection effort, aiming to request Samsung Electronics to hold an extraordinary general meeting. According to South Korean law, the initiators need to gather more than 3% of Samsung's shares. ACT plans to mobilize not only individual investors but also seek support from South Korean national pensions and domestic and foreign asset management institutions.
If this extraordinary general meeting can cross the threshold, it is expected to review two sensitive proposals: requiring Samsung to carry out a stock buyback worth approximately 45.5 trillion Korean won, which is about 32 billion US dollars; and setting a cap on performance bonuses that are linked to operating profits, with major proposals requiring shareholder approval. Samsung has not responded to this yet.
On the surface, retail investors are asking companies to ‘buy shares to stabilize the market’ after stock prices have fallen. Samsung’s stock price has dropped by more than a third since hitting a historical high in June, although the AI boom continues to drive up profits in memory chips. The huge gap between company performance and stock price movements has become the direct trigger for the difficulties faced by retail investors.
But what really intensified the conflict was the salary agreement that Samsung reached with the union in May this year. To avoid a large-scale strike, Samsung agreed to allocate about 10.5% of the profits from its semiconductor business for special performance bonuses, primarily paid in company shares.
Therefore, the dispute is no longer just about whether the bonus is too high, but who has the right to distribute Samsung’s future profits in advance.
For employees, the semiconductor business generates substantial profits. Stock rewards can help retain key talents and bind employees to the company’s long-term interests. However, from the perspective of shareholders, allocating a fixed proportion of operating profits to employees means that the board of directors and the union pre-secure a significant portion of the profits without shareholder involvement.
More importantly, repurchasing shares does not necessarily mean rewarding shareholders. The shares used for cancellation can reduce the total share capital, thereby increasing the value of shares held by remaining shareholders. The shares used for bonuses will return to the market. Samsung may still need to use cash to continue repurchasing shares as a way to replenish shares for employee incentives. According to company disclosures, since 2026, there have been multiple repurchases or grants of treasury shares for employee and management incentive purposes.
The ACT challenge lies in the board of directors' control over this cash and profits. Samsung's current policy is to return 50% of the free cash flow from 2024 to 2026 to shareholders, with a regular dividend of 9.8 trillion yen per year. Retail investors believe that, given the surge in profits, this rate of return is still too slow.
However, the repurchase of 45.5 trillion won is not without costs. Samsung still needs to invest heavily in advanced manufacturing processes, HBM storage chips, and mergers and acquisitions. If retail investors can directly decide the use of such a large amount of cash, the board's long-term investment potential may also be reduced.
Therefore, this action may not necessarily lead to the convening of an extraordinary general meeting of shareholders. Nearly half of Samsung’s common shares are held by foreign investors, and Korean institutions also hold a large number of shares. It is difficult for individual investors to gather 3% of the shares. The real determining factor will be whether the National Pension System and large funds are willing to side with either party.
But even if the initiative fails, ACT has made a question that was previously decided internally by the board public: Should the huge profits created by Samsung be prioritized to reward employees or invest in the future, or should they be returned to shareholders?
Retail investors may not yet be the owners of Samsung, but they no longer want to remain silent investors.
