Samsung Electronics Reclaims No. 1 Market Cap Spot, to Buy Back 90 Trillion Won in Treasury Shares Over 3 Years...Largest Ever

[Financial News] Samsung Electronics will begin buying back treasury shares worth about 90 trillion won, or 290 million shares, equivalent to roughly 5% of its common stock, to pay employee bonuses. The scale is about three times the total amount of treasury share buybacks carried out over the past 10 years, making it the largest ever. As the company competes with SK hynix for the top spot in market capitalization, the unprecedented buyback is expected to serve as a catalyst for higher shareholder value and a rise in its stock price.■ Largest treasury share buyback everAccording to the industry on the 24th, Samsung Electronics will soon announce detailed plans for additional treasury share purchases tied to special management performance bonuses.
Most of the buyback is intended to fund special management performance bonuses for the semiconductor division. Last month, Samsung Electronics agreed with labor representatives to pay 10.5% of operating profit as a special performance bonus for the semiconductor division.
Samsung Electronics currently holds 82.09 million treasury shares, worth about 25 trillion won based on the previous day's closing price. However, it needs to buy back an additional 90 trillion won worth of shares over the next three years to cover special bonuses for the semiconductor division worth 93 trillion won, performance-based stock units (PSU) worth 22 trillion won, and treasury shares worth 6 million won per employee in the finished products division. In terms of shares, that comes to about 290 million shares, nearly 5% of all Samsung Electronics common shares. Over the past 10 years, Samsung Electronics has bought back a total of 30.7 trillion won in treasury shares. The company plans to purchase about three times that amount over the next three years.
■ Why the buyback is neededSamsung Electronics' operating profit is projected at 375 trillion won this year, according to KB Securities, and 548 trillion won next year. If the semiconductor supercycle continues through 2028, cumulative operating profit for 2026 to 2028 would reach 1,471 trillion won. Based on that, total bonuses over the three years are estimated at about 154 trillion won. Samsung Electronics plans to withhold about 40% in taxes and then pay about 93 trillion won in stock. If Goldman Sachs' estimate of 1,514 trillion won in cumulative operating profit over the next three years is applied, the buyback amount could be even larger.
In addition, employees in the finished products division and other units must receive treasury shares worth 6 million won each, though the amount is relatively small. Samsung Electronics also needs to buy additional treasury shares for the performance-based stock system introduced in October last year. The system was designed to strengthen employee accountability for mid- to long-term business performance. Samsung Electronics has promised to grant all 128,000 employees 200 shares for staff and assistant manager-level employees, and 300 shares for manager, deputy general manager and general manager-level employees. Under the PSU structure, if the stock price rises on the evaluation date of Oct. 13, 2028, compared with the commitment date of Oct. 15 last year, the number of shares to be granted increases. The stock price was in the 80,000 to 90,000 won range at the time of the commitment, but it has since risen to 310,000 won, about 3.5 times higher. If the current stock price is maintained until the 2028 evaluation date, the payout multiple would reach 200%, meaning all employees would receive 400 or 600 treasury shares each. In that case, the company would need to provide about 70.58 million shares, with the required buyback amount estimated at 22 trillion won.
■ A card in the market-cap race...Boosting shareholder valueThe planned buyback volume far exceeds the 307 trillion won combined total of the company's three previous shareholder return programs in 2015, 2017 and 2024, raising market expectations. In fact, Samsung Electronics' large-scale treasury share buybacks in the past have led to sharp stock gains. When the company announced a 9.3 trillion won buyback in January 2017, its stock price, then in the 30,000 won range, rose 50.3% to the 57,000 won range by November that year. In November 2024, when it announced a 10 trillion won buyback, the stock rose 7.21% on the day of the announcement and had gained 68.1% by the end of September 2025, when the buyback was completed early.
One-third of the treasury shares Samsung Electronics distributes as special management performance bonuses can be sold immediately, but the remaining two-thirds are subject to sales restrictions for one and two years, respectively. Because circulation of the treasury shares is temporarily limited, the combination of buyback demand and a lock-up effect could support further stock gains, observers said. An industry official said, "Samsung Electronics' current treasury share holdings are far too small compared with the amount of treasury shares it will need to distribute in the future," adding, "The large-scale stock compensation plan to be announced soon is expected to lead to higher shareholder value."
ehcho@fnnews.com Jo Eun-hyo Reporter