SK hynix Labor and Management Agree on Performance Bonus Overhaul for "Growth with Shareholders and Society"... 60% to Be Paid in Company Stock (Comprehensive)

Breakthrough Achieved Through Independent Labor-Management Negotiations
Wage Payments Deferred in the Event of Losses
Participation in Donation "Matching Grants" Program

The labor and management at SK hynix have reached a tentative agreement on a new collective bargaining proposal, which includes paying 60% of performance bonuses in company stock and introducing measures in which both sides participate in overcoming crises if the company faces losses. This agreement is considered significant because it represents a breakthrough in developing a sustainable compensation system independently, without relying on external mediation or existing frameworks.

According to SK hynix on August 20, the labor and management have drawn up a tentative wage and collective bargaining agreement that includes a 6.3% pay raise and payment of 40% of performance bonuses (Profit Sharing, PS) in cash in the corresponding year, with the remaining 60% paid in company stock. Of the stock portion, 40% will be paid during the corresponding year alongside the cash, while the remaining 20% will be deferred and paid over two years. The awarded shares can be sold during the same year.

Key Points of the Tentative Agreement on Wages and Collective Bargaining between SK hynix Labor and Management. SK hynix

The revamped performance bonus system is designed with the intent for employees to grow alongside shareholders, and has been revised to balance the interests of various stakeholders. As a basic principle, 60% of the entire bonus will be paid in company stock. However, employees are given the option to choose the scale and method of the stock compensation, and those who wish may receive up to 100% of their performance bonus in stock. Exceptionally, in the first year of implementation, employees with special personal financial circumstances can select cash payment, taking into account their individual financial management needs.

Previously, SK hynix labor and management had agreed to abolish the PS cap, which was based on 10% of the previous year's operating profit, and maintain this structure for 10 years. According to analyst projections, if SK hynix achieves 250 trillion won in annual operating profit this year, the total pool for profit sharing will amount to 25 trillion won, which is 10% of the operating profit. If this is simply divided among all 35,000 employees, the average pre-tax performance bonus per employee would be about 700 million won.

The actual payout will vary based on position and individual performance evaluations, but under the new system, based on the average amount, an employee would receive approximately 280 million won in cash and about 420 million won in company stock.

Yonhap News Agency

Additionally, a new social contribution program that encourages voluntary employee participation will be introduced. Under a matching grant structure, when an employee donates a portion of their performance bonus, the company contributes an equal amount. Participation is entirely optional for employees. Other measures, such as increasing cafeteria meal prices and improving support programs for family events, were also agreed upon smoothly to enhance workplace welfare.

Notably, the agreement specifies that labor and management will jointly participate in overcoming company crises. In the event of company losses, the agreement sets levels for deferred wage payment to ensure job security for employees and facilitate the company's swift recovery, with a provision that all deferred wages will be paid at once when profitability returns.

SK hynix stated, "This continues the longstanding tradition of overcoming difficult times together through mutual trust and cooperation, such as past voluntary unpaid leave and partial wage deferral during the 2023 downturn." The company added, "This reconfirms SK hynix's unique 'crisis-overcoming DNA' and once again demonstrates a culture of labor-management coexistence."

Soon, the labor union is expected to hold a representative vote to finalize the agreement. However, as this change follows just a year after the previous 10-year commitment to the existing bonus system, and as actual compensation received by employees may vary depending on stock price fluctuations, some controversy is anticipated for the time being. At the time, labor and management had agreed that 80% of last year's performance bonuses would be paid in cash in the same year, and the remaining 20% would be deferred in cash over two years, at 10% per year.

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