​Samsung to increase shareholder dividends further

Samsung Electronics will allocate 50 percent of free cash flow to shareholders in 2016 and 2017 and commence a six-month corporate structure review.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Electronics will allocate 50 percent of its free cash flow to shareholder returns in 2016 and 2017, it announced in a comprehensive update to its shareholder return program.

The company expects 4 trillion won to be paid in dividends this year, an increase of 30 percent from 2015. This will be a rise of 36 percent, or 28,500 won, in dividends per share, it said. Starting next year, Samsung will also pay dividends per quarter.

The remainder of the free cash flow and 800 billion won will be used at the end of January to repurchase shares. Repurchased shares will be cancelled, it said.

The South Korean tech giant introduced its shareholder return program in 2015.

Over 50 percent of Samsung's shares are owned by overseas entities and it has received calls to increase dividends. US hedge fund Elliott Associates -- which opposed Samsung Group's key merger of two affiliates last year, something outsiders saw as a way for the conglomerate to increase control over Samsung Electronics -- has been the most vocal and this year demanded both more dividends and listing the firm in the New York Stock Exchange.

Samsung also said work was underway with outside advisers to review optimal corporate structure. The company said the review will take six months and it was considering a holding company structure.

Samsung Group currently has a complicated cross-share structure that constantly raises concerns over transparency and corporate governance. The ruling Lee family owns direct shares of Samsung Electronics and indirect shares through other affiliates.

Samsung Electronics said it required a net cash balance of 65 to 70 trillion won for sustained business but will return excess cash to shareholders, after a review every three years. The company has been actively acquiring new companies for new growth. It announced the purchase of US auto parts giant Harman for $8 billion earlier this month.

It will nominate one new board member next year. The firm named Lee Jae-yong, the heir-apparent and de facto boss of the entire group, as inside director earlier this month.

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