Samsung, SK hynix CEOs face police probe over 10.5% bonus deal

South Korean police opened an investigation into Samsung Electronics and SK hynix CEOs over a shareholder complaint alleging breach of trust in performance-bonus deals.

The Korea Shareholders Movement Headquarters said Wednesday its complaints against Samsung Electronics co-CEOs Jeon Young-hyun and Roh Tae-moon, and SK hynix CEO Kwak Noh-jung, have been assigned to Investigation Divisions 1 and 2 of the Gyeonggi Nambu Provincial Police Agency, respectively. The group filed the complaints with the National Office of Investigation on July 22, accusing the executives of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

The complaint targets wage agreements reached in May. Samsung will provide a special semiconductor performance bonus equivalent to 10.5 percent of business performance earnings, while SK hynix operates a profit-sharing system that allocates 10 percent of the semiconductor division's operating profit to employee bonuses. The shareholder group argued the executives agreed to union demands without thoroughly reviewing the labor-management agreements, creating a mechanism that improperly transfers company assets. It contends performance bonuses funded by operating profits should not be subject to collective bargaining and require approval at a shareholders' meeting.

The group separately filed a complaint with the Corruption Investigation Office for High-ranking Officials against Labor Minister Kim Young-hoon, alleging abuse of authority and obstruction of rights. It claims Kim overstepped his role by personally mediating Samsung's labor negotiations, helping the company and its union reach a tentative agreement that averted a strike planned for May.

The investigation adds governance uncertainty to two of South Korea's most valuable companies, whose semiconductor operations anchor the KOSPI index. Samsung Electronics is the country's largest company by market value, and SK hynix ranks among its top five, with both competing against global peers including Taiwan's TSMC and US-based Micron Technology in the memory-chip market. Neither company has publicly responded to the allegations.

Investors will watch whether the probe escalates to formal charges, which could set a precedent for how Korean companies structure executive compensation and labor agreements. A ruling against the executives could force changes to bonus structures tied to operating profits, affecting how the two chipmakers reward employees in future bargaining rounds and potentially pressuring their shares in the near term.

This article is for informational purposes only and does not constitute investment advice.