Billion dollar disaster avoided as Samsung strike gets called off

Merely hours before the workers' union at Samsung Electronics was due to go on strike, a tentative agreement has been reached between the parties, thus avoiding a loss for Samsung that could have been as high as $20 billion.

The union has announced that plans for the total strike set for tomorrow have now been suspended. They will now put the tentative agreement signed with Samsung Electronics to all union members for a vote.

It was reported earlier today that there had been no breakthrough in the talks. A few hours later, the government confirmed that another round of talks would now be mediated by the country's Labor Minister Kim Young-hoon.

This session has yielded a result that appears to be workable for both parties. A special management performance bonus will be created under this tentative agreement for the DS division, which makes chips. It will be funded with 10.5% of business performance indicators selected by both parties.

Samsung is also raising the basic incentive to 1.5%, with the total payout ratio hitting 12%. It will pay the special management performance bonus entirely in treasury shares, with a portion of the shares being locked up, so union members won't be able to sell them immediately.

Both parties have also agreed on maintaining this scheme for 10 years, with special bonuses being paid when a minimum level of operating profit is reached by the company.

This tentative agreement will now be voted on by union members from Friday through Monday, May 27. If the majority of members vote in favor, the wage negotiations will end.

Until that happens, it will be business as usual at Samsung's production facilities, ensuring that there's no disruption to production until voting concludes.