[Edaily Reporter Kim Kyung-eun ] SamsungElectronics(005930)has postponed its decision on how to utilize shareholder return funds totaling up to 75 trillion won until the end of January next year, prompting claims that the company must examine potential damage to shareholder value and conflicts of interest. In particular, critics point out that since the timing of the shareholder return decision falls after the period for calculating gift taxes for the controlling family, it is necessary to verify whether the board of directors made an independent judgment that took into account the interests of all shareholders.

On the 5th, Life Asset Management announced that it had sent a Seohan containing these points to SamsungElectronics’ Board of Directors Special Committee and the Samsung Compliance Oversight Committee the previous day. It requested that the Special Committee review the economic rationality and procedural appropriateness of postponing the shareholder return decision, and that the Compliance Oversight Committee examine whether there are potential conflicts of interest arising from the personal interests of top management.

Previously, in September, Life Asset Management proposed to SamsungElectronics’ board of directors that it bring forward the decision on the allocation of remaining shareholder return funds and implement a share buyback and cancellation by the end of the year. However, SamsungElectronics did not present a specific shareholder return plan during its second-quarter earnings announcement on August 21 or its third-quarter earnings announcement on October 29. The company has deferred the decision on how to utilize the remaining funds—ranging from 55 trillion to 75 trillion won—until the end of January next year.

Life Asset Management pointed out that this decision led to a slump in the stock price. SamsungElectronics’ stock price fell 8.70% on the first regular trading day following the August earnings announcement. After the October announcement, it dropped 4.13% and 3.02% over the next two days, respectively. The firm explained that even with the same funds, the effect on enhancing shareholder value can vary depending on the timing and method of shareholder returns.

Life Asset Management stated, “While we cannot definitively conclude that there is a direct link between the timing of the decision on the remaining shareholder returns and the gift tax valuation period for the controlling family, the fact that the initial shareholder return plan was announced in August—prior to the gift agreement—must also be taken into account.” However, “Since the gift agreement had already been made public and the valuation period was underway at the time of the October decision, it is necessary to verify whether the board of directors was fully briefed on these matters and made an independent judgment while identifying and managing potential conflicts of interest.”

Life Asset Management requested that SamsungElectronics’ Board of Directors’ Special Committee verify whether it had compared the costs and benefits of early shareholder returns versus execution in January of next year, and whether it had sufficiently reviewed plans for the repurchase and cancellation of treasury stock within the year. It also asked the Compliance Oversight Committee to examine whether potential conflicts of interest involving top management had been appropriately identified and managed.

Kang Dae-kwon, co-CEO of Life Asset Management, said, “The benefits to shareholders from shareholder returns vary not only by scale but also by timing and method,” adding, “Our request is to review whether there are any aspects that can be implemented early even before the final amount is determined, and to explain the rationale for deferring the decision until January of next year from the perspective of the interests of all shareholders.” He added, “We hope that the independent reviews by these two committees will serve as an opportunity to enhance shareholder confidence in SamsungElectronics’ decision-making.”