Samsung Electronics Unveils Up to $79.6 Billion Shareholder Return Plan, Stock Slides Nearly 9%

Samsung Electronics Co. shares tumbled nearly 9% after the company unveiled a shareholder return plan worth as much as 110 trillion won ($79.6 billion). The reaction contrasted sharply with SK Hynix Inc., whose shares rose after it announced a 40 trillion won ($29 billion) share buyback and retirement plan. In the financial industry, the differing market response is being attributed less to the size of the payouts than to the structure and timing of the returns, particularly whether they would directly boost per-share value through buybacks and cancellations.

Samsung’s 110 Trillion Won Return Plan vs. Hynix’s 40 Trillion Won Draw Opposite Stock Reactions

According to EpicAI, an AI-based investment information platform, Samsung Electronics ended regular trading on Aug. 24 down 8.70% from the previous session at 257,000 won. The shares had closed at 270,000 won on Aug. 21 and fell below the 260,000-won mark in a single session. Samsung Electronics preferred shares also dropped 8.55% to 189,300 won.

Samsung said after a board meeting on Aug. 21 that it expects to secure 90 trillion won to 110 trillion won for shareholder returns in 2026. Of that, about 30 trillion won ($21.7 billion) — including 2.45 trillion won ($1.77 billion) in regular quarterly dividends and 27.55 trillion won ($19.9 billion) in additional cash dividends — will be paid in the third quarter of this year.

The remaining funds will be used for cash dividends or share buybacks and cancellations. Samsung plans to disclose the method and timing of the additional returns in October, then finalize the exact amount and execution plan in January 2027. While the company has disclosed the overall pool, it has yet to decide the size of any stock cancellation that would directly affect the share price.

Despite Samsung’s much larger total return plan, the market response was the opposite of SK Hynix’s. After the close on Aug. 19, SK Hynix announced a 40 trillion won ($29 billion) buyback plan and said it would retire all of the shares. On Aug. 20, the stock surged 12.73% to close at 1.691 million won, then gained another 2.3% on Aug. 21 to end at 1.73 million won.

The gap appears to reflect how quickly the plans feed through to shareholder value rather than the headline amount. SK Hynix will buy back 40 trillion won of stock in the market and retire 3.3% of shares outstanding. It also lifted expectations for further returns by saying it would raise its free cash flow payout ratio to more than 50%. Samsung, by contrast, will first pay about 30 trillion won in cash dividends in the third quarter and wait until January 2027 to finalize the structure of the remaining returns.

SK Hynix Return Policy Seen as ‘Two Birds With One Stone’

Lee Young-gon, head of research at Toss Securities, said the different choices reflected differences in the regulatory environment under South Korea’s Monopoly Regulation and Fair Trade Act and the Financial Industry Structure Improvement Act.

For SK Hynix, buybacks and cancellations are highly favorable from a governance perspective. Under the fair trade law, SK Square Co., as a holding company, must maintain at least a 20% stake in subsidiary SK Hynix.

That stake recently fell to 20% following the issuance of American depositary receipts. If SK Hynix buys back and retires shares, the total number of shares outstanding declines and SK Square’s ownership ratio rises automatically, creating what Lee described as a two-birds-with-one-stone effect.

Samsung Electronics faces the opposite problem. Under the Financial Industry Structure Improvement Act, financial affiliates including Samsung Life Insurance Co. and Samsung Fire & Marine Insurance Co. cannot hold more than a combined 10% stake in Samsung Electronics. As of the end of June, the two companies already held a combined 10.00%, reaching the legal ceiling. If Samsung were to carry out a large stock cancellation, the lower share count would push those affiliates above the 10% threshold. To avoid violating the law, they would have to sell Samsung Electronics shares in the market, creating an overhang.

The ownership structure of the founding family may also have played a role. At SK Hynix, the owner family has almost no direct stake apart from 3,620 shares that Chairman Chey Tae-won recently bought during a sharp decline in the stock. Whether the company raises dividends or retires shares, the family’s cash flow is largely unaffected. Samsung Electronics is different. Chairman Jay Y. Lee, who owns 1.67%, and other family members directly hold shares, meaning cash dividends can flow straight to the family and potentially be used for purposes including inheritance tax payments.

SK Hynix has been buying back about 650,000 shares a day since Aug. 20. That amounts to roughly 12% to 15% of average daily trading volume. The buying demand created by those purchases is being cited as one reason the stock has held up better than Samsung Electronics even on a day when foreign and institutional investors were heavy sellers.

Samsung, by contrast, has unveiled a return plan worth as much as 110 trillion won, but the direct buying impact in the market is limited for now. The method for returning the remaining 60 trillion won to 80 trillion won has not yet been decided. Lee said SK Hynix would likely see a bigger near-term effect on share supply and demand because it chose buybacks and cancellations, which involve purchasing shares in the market every day and retiring them.

Some in the financial industry also expressed disappointment with Samsung Electronics’ investor relations communication, saying that announcing the total size of shareholder returns was not enough.

“One disappointing point is that Samsung left room for investors to interpret the plan by postponing details on the size and timing of share buybacks and cancellations, which the market wanted most,” an industry official said. “It makes you wonder whether this is really the best Samsung can do on IR.”

The person added that Samsung Electronics and SK Hynix are no longer companies confined to the Korean market, but established global leaders. Their investor relations should meet global standards, the person said, adding that providing investors with the most concrete and predictable information possible and communicating actively with the market is the way to raise corporate value.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com