SK hynix unions reject wage deal over stock-based bonuses

Production workers’ unions at SK hynix on Tuesday voted down a tentative agreement reached between their delegates and management, sending the issue of how much of their hefty performance bonuses should be paid in treasury shares back to the negotiating table.

According to industry officials, the tentative agreement was rejected after 50.08 percent, or 7,535 members, of the two unions voted against it. Each union respectively represents production workers at the Icheon plant in Gyeonggi Province and Cheongju plant in North Chungcheong Province.

The approval rate stood at 49.92 percent, or 7,510 votes, leaving a margin of just 25 votes. About 94 percent of the unions’ combined 16,083 members participated in the vote.

The company’s third union, which represents office workers, was scheduled to complete its own vote on the agreement on Tuesday afternoon, but regardless of the outcome, the tentative deal is expected to be scrapped, with labor and management returning to negotiations.

The tentative agreement was reached last Thursday, calling for a 6.3 percent wage increase. For performance bonuses, the agreement states that 60 percent will be paid in treasury shares and the remaining 40 percent in cash. For the 2026 performance bonuses to be paid early next year, the company will allow employees to receive up to 80 percent in cash.

Highlighting the agreement was the method of paying performance bonuses, which the company’s unions and management last year agreed to use 10 percent of the company’s operating profit as a funding pool and maintain the system for 10 years.

Since SK hynix is expected to post an operating profit of 250 trillion won ($179 billion) this year, the agreement would mean each employee receives roughly 700 million won in bonus payments, of which 420 million won would be paid in treasury shares.

Some union members have opposed the scheme, arguing that the company was attempting to change the payment method just a year after the two sides agreed to maintain it for 10 years. They also claimed that receiving performance bonuses in shares could make the value of their compensation fluctuate depending on the company’s stock price.

Adjustments to the portion of performance bonuses paid in treasury shares are expected to be a key issue in the renewed negotiations. With some union members demanding that the bonuses be paid entirely in cash, it may be difficult for management to stick to the initial ratio.

Rather than withdrawing the treasury-share payment plan altogether, the company could seek a compromise by adjusting the ratio between cash and shares or offering additional safeguards for the share-based portion.

SK hynix’s wage negotiation bears significance, with the company creating a ripple across industries over how massive corporate gains should be shared with employees.

After the company agreed to use 10 percent of its operating profit as the financial pool for employee bonuses last year, labor unions at other companies also began demanding similar schemes, fueling broader social tensions.

Following strikes by its labor unions and other labor-related disputes, Samsung Electronics introduced a special performance bonus funded by 10.5 percent of its operating profit, but decided to pay it in treasury shares.