Proposed plan puts 60% of profit-sharing awards in company stock as AI earnings soar
SK hynix and its labor union reached a tentative agreement Thursday to pay 60 percent of profit-sharing bonuses in company shares and defer part of employees’ wages if the chipmaker posts a loss.
The agreement, reached in this year’s wage and collective bargaining talks, also includes a 6.3 percent wage increase and gives employees greater choice over how they receive the company’s profit-sharing bonus.
Under the deal, 40 percent of PS would be paid in cash in the year it is awarded, while another 40 percent would be paid in SK hynix shares. The remaining 20 percent would be distributed in shares over the following two years. Shares distributed in a given year could be sold immediately.
Receiving 60 percent of PS in shares would be the default, but employees could choose to take a larger portion in stock, including up to 100 percent of the bonus.
For the first year of the new system, employees with personal financial needs will be allowed the exception of opting for a cash payout, taking into account existing financial plans.
SK hynix said the revised structure is intended to give employees a greater stake in the company’s growth while better aligning their interests with those of shareholders.
The change comes just a year after management and labor overhauled the PS system by scrapping the ceiling on payouts and agreeing to maintain a new profit-sharing formula for 10 years.
Under last year’s agreement, SK hynix sets aside 10 percent of annual operating profit for the bonus pool. Eighty percent of PS was to be paid in cash in the year it was awarded, with the remaining 20 percent deferred and paid in cash over the following two years.
How the bonus would be paid emerged as a key issue in this year’s negotiations after management proposed shifting a larger portion of the payout from cash to company shares. The union initially opposed the proposal, arguing that changing the payment method could undermine the intent of last year’s agreement.
The tentative compromise leaves the 10 percent formula intact while substantially changing the mix between cash and stock.
The potential size of this year’s payout has drawn particular attention as SK hynix continues to ride strong demand for high-bandwidth memory used in artificial intelligence computing.
If the chipmaker posts annual operating profit of 250 trillion won ($179 billion), as some brokerage houses project, the PS pool would reach 25 trillion won under the 10 percent formula.
Divided evenly among SK hynix’s roughly 35,000 employees, that would translate into an average pretax bonus of about 700 million won per person. Actual payouts would vary depending on job grade and individual performance.
Based on that average, about 280 million won would be paid in cash and roughly 420 million won worth of SK hynix shares under the new structure.
The tentative agreement also spells out how management and labor would share the burden during a downturn.
If SK hynix posts a loss, the two sides would determine how much of employees’ wages should be deferred to help protect jobs and speed up the company’s recovery. The deferred wages would be paid in a lump sum once the company returns to profit.
“This carries on our tradition of overcoming difficult periods through mutual trust and cooperation, from voluntary unpaid leave in the past to partial wage deferrals during the 2023 downturn,” an SK hynix official said.
“It reaffirms SK hynix’s unique ‘crisis-overcoming DNA’ and once again demonstrates our cooperative labor-management culture.”
By Jie Ye-eun (yeeun@heraldcorp.com)
