Fortunes of Samsung Execs Defy Profit Slump

Fortunes of Samsung Execs Defy Profit Slump

Last year, the mobile division of Samsung Electronics suffered from a slump and the main profit driver turned out to be the lower-profile electronic components business. However, even though the South Korean conglomerate was hit drastically by the decline in the mobile business, there was no shift seen in one prominent aspect; the salaries of the Samsung executives that are responsible for running and managing the mobile division. The salary of co-CEO, J.K. Shin, who oversees the mobile division of the firm, was doubled last year. This information was revealed in a regulatory filing made by the company. As compared to his other co-CEO, Mr. Shin was paid 50% more.

Likewise, his salary was three times more than other Samsung executives. These details were revealed in the filings made by the South Korean giant ahead of a regulatory deadline. The contrasting fortunes of the firm underscore its picture of profits and the pay structure used for its executives as they don’t seem to be in accordance. Even though in recent memory, the past couple of years turned out to be the most bruising ones in its history as there was a 74% decline in the mobile profits in the third quarter as opposed to the year before, Mr. Shin was given a take-home salary that amounted to $13.2 million. This was twice the figure he had been paid in 2013.

Most of the pay that was given to Mr. Shin last year was in the first half of 2014 and was handed in a form of bonus, which had been approved by the board of directors of the company. In contrast, the co-chief executive responsible for managing the components division of the firm including display panels and semiconductors, Kwon Oh-hyun was only given a 39% raise in salary as compared to 2013.

In the third quarter of last year, Mr. Kwon’s division had taken over the mobile division headed by Mr. Shin to make a contribution of 57% to the overall operating profit of the company. This was the first time that the components division had managed to outstrip the mobile division after 2010. Not only does Mr. Kwon has an executive role in the firm, he is also the vice chairman, outranking Mr. Shin. He acts as chairman with Jay Y. Lee, the third-generation of Samsung’s founder, whose salary wasn’t disclosed in the filing. Technically, neither Mr. Lee and nor Lee Kun-hee, his father, sit on the board of directors so they are exempted from disclosing their pay.

The pay given to Mr. Shin was also three times greater than the co-chief executive, B.K. Yoon, who manages the consumer electronics division that produces home appliances and televisions. Even though this business generates a lot of revenue, the margin is razor-thin so the bottom line contribution it makes is negligible. Mr. Yoon was given an 8% rise in salary as opposed to 2013. Nonetheless, the pay given to the three co-CEO’s is considerably dwarfed by those paid to the remaining family-run conglomerate of the South Korean firm.

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