[Exclusive In-Depth Report 2] Is Samsung Electronics Sinking With the Emergence of a Hardline Union?

[CEONEWS = Chief Reporter Jaehoon Lee] The colossal ship called Samsung Electronics is now caught in an unprecedented internal storm. The moral hazard controversy triggered by the owner family’s massive stock sale—conducted to cover over ₩12 trillion in inheritance taxes—has struck at the most vulnerable fault line of Samsung’s empire: the end of its “no-union management” doctrine.

Recently, Hong Ra-hee, former director of the Leeum Museum of Art, Lee Jae-yong, Chairman of Samsung Electronics, and Lee Boo-jin, CEO of Hotel Shilla, sold approximately ₩1.7 trillion worth of Samsung Electronics shares via a block deal when the stock price hovered around ₩90,000. The family explained that the sale was necessary to secure funds for inheritance tax payments.

The problem, however, lies in the timing. Just before the massive sell-off, Samsung Electronics offered employees a “20% stock price rise incentive” program—promising to grant shares by position level if the target was met.

This so-called “sweetener” has now exploded into a crisis. The Samsung Electronics National Labor Union (Jeonsamno) accused management of deception, claiming that the incentive was a “bait” to prevent employees from selling their shares—thus propping up the stock price for the owner family’s benefit. “The owners sold, the employees stayed trapped,” say enraged workers, as the sense of betrayal spreads like wildfire.

Union membership is now skyrocketing, increasing by roughly 1,000 new members per day—an unprecedented surge in Samsung’s history. After decades of “no-union” policy, the company now faces its greatest internal threat yet: the birth of a militant union that could destabilize the foundation of its management and threaten its global competitiveness.

CEONEWS examines the background and implications of this crisis—analyzing the facts, data, and likely scenarios that could determine Samsung’s future.

■ “₩90,000 Samsung” and the Betrayal — The Truth Behind the ₩1.7 Trillion Sale and the Incentive Plan

Chairman Lee Jae-yong, his mother Hong Ra-hee, and his younger sister Lee Seo-jin are attending a memorial concert marking the third anniversary of the late Chairman Lee Kun-hee. [Photo = Samsung Electronics]

At the heart of this controversy lies the issue of timing and trust.
Large-scale share disposals by major shareholders often trigger market fears of an “overhang,” leading to downward pressure on stock prices. From the owner family’s standpoint, if shares must be sold to pay inheritance taxes, the logical choice is to sell at the highest possible price, under the most stable conditions.

Coincidentally—or not—just before the family executed its ₩1.7 trillion block deal, Samsung Electronics announced an employee incentive plan tied to stock performance. If the share price rose 20%, employees at each level would receive a significant number of company shares as a bonus.

Many employees interpreted this as a genuine TSR (Total Shareholder Return) program—a fair way to share in the company’s growth. Many decided to hold onto their shares, deferring sales in the hope of reaching the incentive target.

In retrospect, however, that “incentive” served as a shield for the family’s safe exit. With employee selling pressure suppressed, the stock remained stable in the ₩90,000 range—long enough for the family to cash out ₩1.7 trillion. Inside the company, anger boiled over: “We became cannon fodder for the owner’s inheritance tax.”

This is not just a financial grievance—it represents a profound collapse of trust between management and employees.

[Company’s Position] “₩12 Trillion Tax Burden—We Had No Choice”

From Chairman Lee Jae-yong’s perspective, the situation is dire. Following the 2020 death of the late Chairman Lee Kun-hee, the family faced an inheritance tax exceeding ₩12 trillion—the largest in Korean history. The payments have been spread over six installments from 2021 to 2026.

With annual payments exceeding ₩2 trillion, few options remain other than selling shares. Even increased dividends have proven insufficient. The family has already sold stakes in Samsung Electronics, Samsung Life Insurance, and Samsung SDS several times.

Management insists that the latest ₩1.7 trillion sale was an “unavoidable measure” to fulfill legal tax obligations. The “20% stock incentive”, they claim, was a separate initiative—intended to boost morale, support shareholder value, and align employee rewards with company growth. The overlapping timing, Samsung says, was coincidental, not deliberate manipulation.

Still, critics argue that even if no laws were broken, the decision violated the principle of good faith and fair dealing. Announcing an incentive to discourage employee selling while the owners secretly planned a large disposal reflects a severe breakdown of internal communication and corporate governance.

[Union’s Position] “Trust Is Gone—The ‘No-Union’ Era Is Over”

For the labor union, this incident has become a rallying cry. Since Chairman Lee Jae-yong’s 2020 public apology and pledge to end Samsung’s “no-union management,” union activity had remained relatively moderate—until now.

The “incentive deception” changed everything. Jeonsamno declared,

“The company mocked 120,000 employees and used them as shields for the owner’s private interest. This amounts to moral fraud and possibly breach of trust.”

Data supports the outrage: union membership has surged exponentially, with over 1,000 new members joining daily since the scandal broke. The union’s agenda has also evolved—no longer limited to wages or benefits, but expanding into corporate transparency, checks on owner risk, and fair profit-sharing.

Union leaders assert,

“The company still treats workers as subjects to manage, not partners in growth.”

They are demanding a full investigation, accountability for those responsible, and institutional safeguards against recurrence. If management resists, they warn, Samsung’s first-ever full-scale strike could become reality.

[Outlook] “Titanic or Course Correction?”

Samsung Electronics now stands at a historic crossroads. Its semiconductor (DS) division has already lost momentum to SK hynix in the HBM (High Bandwidth Memory) race, while smartphone and home appliance divisions face headwinds from a global slowdown and intensifying Chinese competition.

In this “perfect storm,” the rise of a strong labor movement could become the iceberg that sinks the ship. In semiconductor manufacturing, even a one-hour shutdown can cause losses in the hundreds of billions of won. If militant unions take a hardline stance—holding production hostage—the economic fallout would be devastating.

Ultimately, the burden of leadership falls again on Chairman Lee Jae-yong and his executive team. The inheritance tax problem is far from over—more stock sales may be necessary. But another misstep could irreparably damage the fragile trust between management and employees.

Whether Samsung Electronics will follow the path of the Titanic, or steer toward a new course of labor partnership and restored confidence, remains to be seen. One thing is certain:
This crisis will mark a major inflection point—not only for Samsung’s labor relations but for the entire corporate governance landscape of South Korea.