Samsung Electronics plans to convene its board of directors by the end of this month and officially announce a shareholder return policy amounting to over 100 trillion won—the largest ever among domestic companies. This move aims to clearly demonstrate the company's principle of sharing results with shareholders, who are the owners of the company, amid a semiconductor supercycle that has seen record-breaking performance in every quarter.
According to industry sources on the 20th, Samsung Electronics is scheduled to convene its board of directors by mid-August to approve major shareholder return measures, including special cash dividends. The total amount of returns is expected to exceed 100 trillion won. This follows SK Hynix's announcement the previous day of a 40 trillion won share buyback and cancellation, marking another record-level shareholder return policy.
Initially, 50% of free cash flow (FCF) will be utilized for these returns. While some analysts have speculated about shareholder returns reaching up to 200 trillion won, the prevailing view is that this is unrealistic when considering increasing capital investment amounts. Samsung Electronics alone spent over 55 trillion won on research and development (R&D) and capital investments in the first half of the year. Unlike operating profit, which only reflects costs through accounting treatment and depreciation, FCF deducts equipment purchase costs in full.
An industry insider stated, "Regardless of Wall Street speculation, formalizing a shareholder return policy in the 100th trillion won range is a watershed moment for enhancing shareholder value." The insider added, "Given that performance is expected to improve even further next year, the absolute amount of shareholder returns corresponding to '50% of FCF' will be significantly higher."
The specific measures are expected to focus primarily on cash dividends. In SK Hynix's case, SK Square must secure a certain shareholding percentage under the Monopoly Regulation and Fair Trade Act, making share cancellation relatively preferable as it increases ownership stakes. However, Samsung Electronics finds dividend distribution more beneficial for corporate governance management. Under the "Act on Structural Improvement of the Financial Industry" (Financial Separation Act), if share cancellation leads to increased holdings of Samsung Life Insurance and Samsung Fire & Marine Insurance by Samsung Electronics, it would create additional regulatory burdens.
Following this announcement, Samsung Electronics plans to continuously review additional shareholder return measures while monitoring performance fluctuations such as cash flow changes. With the number of small shareholders reaching 8 million (7.971242 million as of end-June), the company has become a national enterprise. There is also an underlying assessment that its stock price remains undervalued and fails to fully reflect its strong performance.
Earlier, during last month's earnings announcement, Samsung Electronics stated, "The current board of directors and management are actively discussing specific implementation plans for this year's shareholder return policy, including special dividends." The company further added, "We will prepare measures to maximize the effects of enhancing shareholder value and secure an optimal balance between reinvestment for future growth and shareholder returns, which we will share with shareholders shortly."
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