Samsung, SK Hynix CEOs Accused of Breach of Trust over Performance Bonus Dispute; Police Launch Investigation

A South Korean minority shareholder group has filed a complaint alleging that top executives at Samsung Electronics (005930KS) and SK Hynix (000660KS) engaged in acts of breach of trust, with the cases now under police investigation, drawing market attention to corporate governance and shareholder rights at the two semiconductor giants.

The shareholder group, named 'Korea Shareholder Movement Headquarters,' announced on August 5 that the Gyeonggi Southern Police Agency has assigned the two cases to its First and Second Investigation Divisions. The Samsung case involves Samsung Electronics co-CEOs Jeon Young-hyun and Vice Chairman Roh Tae-moon, while the SK Hynix case involves CEO Kwak Noh-jung. The group alleges that the executives failed to conduct adequate review of the agreements during performance bonus negotiations with labor unions, potentially constituting breach of trust.

The controversy stems from performance bonus arrangements both companies reached with employees in May this year. Samsung Electronics agreed to provide a special bonus equivalent to 10.5% of semiconductor business performance profits, while SK Hynix established a profit-sharing mechanism allocating 10% of its semiconductor division's operating profit to employee bonuses.

The 'Korea Shareholder Movement Headquarters' argues that performance bonuses do not fall under the scope of collective labor negotiations. Tying a fixed percentage of operating profits to bonus schemes should require shareholder approval rather than being decided unilaterally by management and unions.

The group contends that by agreeing to union demands without thoroughly reviewing the labor agreements, the executives effectively created a mechanism for transferring company assets, potentially leading to asset loss and harming shareholder interests—thus, the executives should bear legal responsibility.

Currently, the Samsung case is being handled by the First Investigation Division of the Gyeonggi Southern Police Agency, while the SK Hynix case is under the Second Investigation Division, with police reviewing the complaint details.

In addition to corporate executives, the 'Korea Shareholder Movement Headquarters' has also targeted government officials, filing a separate complaint with the High-Level Public Officials Corruption Investigation Office (Korean Corruption Investigation Office for Public Officials), accusing Labor Minister Kim Young-hoon of abuse of power, obstruction of rights, and coercive conduct.

The group claims there was improper government intervention during Samsung Electronics' temporary agreement with its union in May, expanding the controversy from corporate governance into the realm of government conduct.

To date, neither Samsung Electronics nor SK Hynix has issued a public response to the allegations.