Key points
- ACT wants Samsung to repurchase and cancel at least 45.5 trillion won ($32.5 billion) in stock, days after SK Hynix approved its own 40 trillion won buyback.
- ACT is pushing to force a shareholder vote on the demand.
- Samsung says a shareholder-return plan is coming this month, with a board vote possible in September.
A minority-shareholder group called ACT (액트) wants Samsung Electronics to buy back and cancel at least 45.5 trillion won ($32.5 billion) of its own stock, and it's moving to force a shareholder vote on the demand. The push landed on Aug. 16, three days before SK Hynix's board approved its own 40 trillion won ($28.6 billion) buyback and cancellation on Aug. 19. Samsung's own management has said a shareholder return plan is coming this month, with a board vote possible in September.
ACT's institute for corporate governance filed the demand on Aug. 16. Its core argument is simple. Samsung has already promised to return 50% of its free cash flow to shareholders, and ACT estimates that free cash flow at about 91 trillion won ($65 billion) for the second quarter alone. Half of that is 45.5 trillion won. ACT wants Samsung to commit to it as a buyback and cancellation, not a dividend, and it's pushing to put the plan on the agenda of an extraordinary shareholder meeting.
The group's case leans on comparison. It pointed to global memory competitors that have set their own return targets at 97% to 100% of free cash flow, and it argued Samsung should move toward that level too. It also pointed to a specific domestic example, Meritz Financial Group (메리츠금융지주), which has published a standing rule for how it allocates capital. Meritz compares the expected return on internal investment against a buyback and against a cash dividend, then puts money wherever the return is highest, and discloses the reasoning. The real complaint is narrower than the payout size. Samsung hasn't published a rule like that of its own, especially past 2027, where ACT says the company's shareholder-return plan runs out even though its investment and compensation plans reach into the next decade.
The numbers behind the proposal
ACT calculated its own expected return from a Samsung buyback. Based on a forward price-to-earnings ratio of about 4x, the group estimated a 25% return. That is well above the 13.98% cost of equity it calculated for Samsung. Both figures are ACT's assumptions, not Samsung's. They nevertheless underpin the group's argument that repurchasing undervalued shares would be a better use of the company's cash than almost any available alternative.
ACT also argues that Samsung can afford the proposal without taking on debt. As of June, the company had a net cash position of approximately 167 trillion won ($119 billion). Its regular annual dividend is currently about 9.8 trillion won ($7 billion). The group is therefore asking Samsung to deploy cash already on its balance sheet more quickly, not to borrow to fund the repurchase.
What Samsung has said
Samsung hasn't confirmed a number. On last month's earnings call, the company's own language was that "the board and management are actively discussing concrete implementation plans for shareholder return policies, including special dividends, this year," and that it would share the plan with shareholders soon. Local reporting on Aug. 19 said a plan could come as early as this month, with formal board approval possible in September.
SK Hynix's own move landed right on top of that backdrop. I've covered SK Hynix's decision separately, but the short version is that SK Hynix's board approved a 40 trillion won buyback on Aug. 19, said it will cancel every share, and raised its own payout target to half or more of free cash flow through 2027. Samsung and SK Hynix together make up most of the Kospi's value, so what Samsung does next carries weight for the whole index, not just its own shareholders.
Meanwhile, ACT's target price and expected-return figures are its own estimates, not Samsung's. What actually gets approved, and when, is still Samsung's call.
Sources
- 파이낸셜뉴스, "배당 말고 45조 자사주 사라" 삼성전자에 '메리츠式 처방' 꺼낸 주주들, on ACT's demand, its Meritz comparison, and its return estimates.
- 머니투데이, 삼성전자 특별배당 이뤄질까..이르면 이달 주주환원책 윤곽, on Samsung's own timeline and its earnings-call language.
- Our earlier coverage: SK Hynix's 40 trillion won buyback, the combined payout estimate for both companies.
ACT's comments are translated from Korean. Figures are from South Korean market reporting, converted to US dollars at about 1,400 won to the dollar. This is general market commentary and not investment advice.
