Reuters reports that almost 200 Samsung managers have “voluntarily” handed back a quarter of their first-half bonuses in anticipation of what is expected to be the company’s worst quarterly profit for two years.
The decision to return some of the bonus was partly a gesture to demonstrate that managers are taking responsibility for the earnings decline, and partly a way to show that management will work harder, the source told Reuters on Friday, declining to be identified due to the sensitivity of the matter.
While Samsung remains the world’s largest smartphone manufacturer, it has been increasingly hit by lower-cost competition from Chinese companies like Xiaomi and Lenovo. Xiaomi recently announced that it had more than doubled its year-on-year sales as it began its international expansion
While analysts had expected Samsung’s Q2 results to be poor, the company’s profit guidance was even lower at $7.1B, a year-on-year fall of 24 percent.
The performance of the mobile division has a dramatic impact on the company as a whole, with first-quarter profits of $6.2B making up the bulk of the overall Samsung group profits of $7.3B.
Although handing back part of their bonuses was described as voluntary, such behaviour is commonly expected in South Korea and it is unlikely that many would have refused the request.