Samsung managers said to return nearly $3M in bonuses

The gesture, which is not uncommon in Korea, comes as Samsung's earnings guidance falls far below analyst estimates.

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Josh Miller/CNET

Hundreds of Samsung managers have reportedly returned part of their bonuses for the first half of the year as the electronics maker prepares to report worse-than-expected second-quarter earnings.

Nearly 200 managers in the Samsung Electronics mobile division returned part of their bonus, Reuters reported on Friday, citing a source with knowledge of the give-back. Local media reports estimate the returned bonuses could total more than 3 billion won ($2.9 million), according to Reuters.

The move by managers, which is not uncommon at Korean businesses, is a response to Samsung's poor financial performance in the second quarter of the year. It shows the managers are willing to work harder and take responsibility for the earnings decline, according to Reuter's source.

Samsung last week released its earnings guidance on the second quarter of 2014, revealing that its sales fell 4 trillion won ($3.9 billion) year over year. The company's operating profit was down 1 trillion won, surprising analysts and investors who had expected far better performance from the company. Samsung will release its full second-quarter earnings on July 31.

Samsung's troubles last quarter can be directly attributed to China, where it's facing increased pressure from competitors offering devices appealing to both budget-conscious consumers and those looking for high-end smartphones. Lenovo has been an especially concerning competitor, gaining market share since the beginning of the year.

During the first quarter, in fact, Samsung's smartphone market share stood at 18 percent in China. Lenovo and Xiaomi were hot on its heels at 12 percent and 11 percent market share, respectively.

Although Americans might find employees giving back bonuses rather unorthodox, in the Korean corporate world, it's commonplace. When companies perform poorly, managers hold themselves responsible and give back bonuses based on their performance. It's worth noting, however, that the Samsung managers gave back a quarter of their first-half bonus, keeping the rest for themselves.

CNET has contacted Samsung for comment on the managers' actions. We will update this story when we have more information.

 

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