SK hynix Labor and Management Reach Tentative Wage Deal... 60% of Bonuses to Be Paid in Company Shares

Wages to Increase by 6.3%; 40% of Bonus to be Paid in Cash
Internal Friction Expected After System Change in Just One Year

SK hynix's management and labor have reached a tentative agreement on this year’s wage and collective bargaining negotiations. The agreement reportedly includes a 6.3% wage increase and a new payment method for the company’s main performance bonus system, the Profit Sharing (PS) scheme. Under this proposal, 40% of the PS payment will be made in cash, while the remaining 60% will be granted in company-issued shares.

According to industry sources on August 20, the SK hynix labor union convened an emergency temporary delegates’ meeting that afternoon to brief its members on the details of the “2026 Provisional Wage and Collective Agreement.”

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The most notable change in this round of negotiations is the adjustment to the existing performance bonus payout structure. According to the agreement, 40% of the Profit Sharing will be paid in cash during the current year, with the remaining 60% awarded as company shares. Of this stock portion, employees can sell 40% immediately on the market for cash, while the remaining 20% will be deferred and paid at a later predetermined date.

If SK hynix achieves its projected annual operating profit of 250 trillion won this year, as anticipated by the securities industry, the total pool for the Profit Sharing program would amount to 25 trillion won, or 10% of operating profit. Dividing this by the company’s workforce of approximately 35,000 employees yields an average pre-tax bonus per person of about 700 million won.

While the actual payout will vary based on position and individual work performance evaluations, applying the new system to the average payout means each employee would receive about 280 million won in cash and about 420 million won in company shares. Beyond this, the tentative agreement also includes a 6.3% wage increase and enhancements to employee welfare, such as an increase in in-house welfare points.

The labor union plans to conduct a delegate vote soon to finalize the tentative agreement. However, it is expected that there may be some friction going forward, as the bonus system is being altered just one year after both sides agreed to keep the existing structure for 10 years. Under last year’s deal, 80% of the performance bonus was paid in cash during the current year, with the remaining 20% deferred as cash in two installments of 10% over two years. With the new stock-based plan, fluctuations in share prices could lead to changes in the actual payout employees receive.

This content was produced with the assistance of AI translation services.