Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
SK hynix adjusts incentive allocation to soothe angry union
SK hynix's chip manufacturing plant in Icheon, Gyeonggi Province / Courtesy of SK hynix
By Baek Byung-yeul
By Baek Byung-yeul
SK hynix has amended its incentive calculating system after disgruntled employees demanded that management come up with a more equitable bonus structure.
The company said a meeting was held with union leaders at its headquarters in Icheon, south of Seoul, Thursday, to address the problem, and the union agreed to an offer by management to change the measurement method of calculating the profit-sharing bonus system.
Under the agreement, the bonus program will no longer be calculated based on the company's economic value added (EVA) index, which refers to a calculation of how much profit remains after deducting the costs of a company's capital spending from its operating profit.
Instead, bonuses will be decided based on the memory chip maker's annual operating profit. Furthermore, the company will issue employees with stocks equivalent to 200 percent of their base salary.
With the two sides coming to an agreement, SK hynix said it expects the recent controversy over the profit-sharing issue to be resolved.
“I apologize for the apparent lack of sufficient communication between the company and employees,” SK hynix CEO Lee Seok-hee said in a statement. “As the most important value of a company is trust between the company and its employees, I will try to focus more on fairness and transparency when managing the company.”
Kim Hae-ju, a union leader at SK hynix, welcomed the decision, saying “the company and its employees have opened a new path for mutual development.”
Even though SK hynix saw earnings improve in 2020, workers had complained about receiving lower-than-expected incentives. The company previously notified its employees that it would provide profit-sharing bonuses equivalent to 20 percent of their annual salaries.
Workers also staged a protest in front of SK Group Chey Tae-won, who visited SK hynix's newly built chip-manufacturing plant in Icheon, Gyeonggi Province, Feb. 1, demanding he establish a new metric for calculating bonuses.
Facing the backlash from employees, Chey promised to return all of his salary and incentives he earned last year from SK hynix, which amounts to around 3 billion won ($2.7 million). "I couldn't understand the pain felt by the employees. I apologize for the lack of communication as well," the chairman said.
Despite impacts from the COVID-19 pandemic, SK hynix performed well in 2020, generating an operating profit of 5.01 trillion won, up 84.3 percent from the previous year. The company's sales stood at 31.9 trillion won, an 18.2 percent increase year-on-year.