SK hynix unions reject wage deal over stock-based bonuses
Summary
SK hynix production workers’ unions on Tuesday rejected a tentative wage agreement over the company’s plan to pay part of performance bonuses in treasury shares. The vote failed by just 25 votes, with 50.08 percent opposing the deal and 49.92 percent supporting it. The company and unions are expected to return to negotiations, with the bonus payment ratio a key issue. The dispute comes as SK hynix’s huge profits have intensified broader debate over how corporate gains should be shared with workers.
Key Facts
- The tentative agreement called for a 6.3 percent wage increase.
- Under the deal, 60 percent of performance bonuses would have been paid in treasury shares and 40 percent in cash.
- About 94 percent of the unions’ combined 16,083 members took part in the vote, and 7,535 members voted against the agreement.
- SK hynix is expected to post 250 trillion won in operating profit this year, which would create a roughly 700 million won bonus per employee under the 10 percent pool arrangement.
- The company’s third union, representing office workers, was scheduled to finish its own vote on Tuesday afternoon, but the tentative deal was expected to be scrapped regardless of the result.
60% stock-based bonus plan sends talks back to table
An SK hynix plant in Icheon, Gyeonggi Province, on June 29 / Yonhap
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. The unions each represent production workers at 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 250 trillion won ($179 billion) in operating profit this year, the agreement would mean a roughly 700 million won bonus per employee, 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.
SK hynix's M16 plant in Icheon / Courtesy of SK hynix
How the portion of performance bonuses paid in treasury shares will be adjusted is 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 the Korean industry 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 general 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.
Explore More
- Q.
- Q.
- Q.