Galaxy Note 7 was supposed to be the best selling smartphone ever in Samsung’s history. However, after a series of smartphone battery explosion accidents in October 2016, Samsung was forced to halt their entire production, and suffered a loss of several billion dollars as a result. The company has yet to announce the detailed reasons behind its smartphones’ explosions.

Nonetheless, all of Samsung’s mobile division employees will be forced to adopt a tighter-budget following Lunar New Year, because Samsung is preparing to reduce the division’s employee bonuses. These bonuses are highly related to a division’s revenue and profit. Because Galaxy Note 7’s aftermath cost Samsung billions of US dollars, this division must pay the price by lowering employees’ bonuses.

According to South Korea’s local media, Samsung usually issues a 50% bonus to each related employee after a division’s operating profit surpasses the extra 20% threshold of the target set by Samsung.

However, Galaxy Note 7’s accident regrettably slashed Samsung for as much as billions of US dollars. Lowering employee’s bonus to 17% of annual salary set a first record of under 50% of annual salary in the past six years. The bonus issuance date will be Jan. 26, 2017.

Samsung’s mobile division employees had traditionally been able to enjoy a 50% bonus of their annual salary each year during the rapid growth period of the smartphone market, according to the Korean media. Nevertheless, based on Samsung’s financial report in the third quarter of 2016, Samsung’s mobile division net income merely reached 100 billion Korean Won. Compared with the 2.4 trillion Korean Won from the same period during 2015, the latest figure showed a significant decline. The mobile division’s income is also significantly lower than the numbers from the semiconductor division, which enjoyed a net income of 3.37 trillion Korean Won in the third quarter of 2016. For the entire year, each of the semiconductor division’s employee are expected to maintain a bonus of 50% of their annual salary.

By: DocMemory
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