SK hynix labor and management have drawn up a tentative wage and collective agreement that raises this year's pay by 6.3% and pays 60% of the profit-sharing (PS) in stock. It partly changes the PS payment system introduced last year after just one year.
According to SK hynix on the 20th, labor and management set the wage increase at 6.3% and prepared a tentative agreement that includes the PS payment method, measures to overcome crises during losses, and welfare programs. The union held an emergency provisional delegates' meeting that afternoon and explained the main points of the tentative deal to the delegates.
The key is a change in the PS payment method. Forty percent of the total PS will be paid in cash in the relevant year, and 40% will be paid in stock that can be sold within the same year. The remaining 20% will be deferred and paid in stock, 10% each, one year and two years later.
Members can choose the proportion paid in stock. The default is to receive 60% of PS in stock, but if a member wishes, the stock portion can be raised to as much as 100%. In the first year of implementation, members with reasons such as cash management may choose cash payment.
Safeguards for stock price fluctuations were also prepared. When determining the number of shares, the lowest price among ① the closing price on the date of the annual preliminary results disclosure, ② the closing price on the PS cash payment date, and ③ the closing price on the stock payment date will be applied. For deferred portions, either the number of shares or the deferred amount will be fixed in the year of actual payment.
An SK hynix representative said, "We set 60% of the total performance bonus as the stock payment standard, but gave members the option to set the scale and method of stock payment up to 100% if they wish."
Previously, the SK hynix labor and management introduced a system last year that set the PS funding at 10% of operating profit and abolished the payment cap. They agreed to maintain that framework for 10 years. At the time, they agreed to pay 80% of PS in cash in the relevant year and defer the remaining 20% in cash, 10% each, over two years.
In this year's talks, they kept the PS calculation standard but changed the payment means from cash-centric to a structure combining cash and stock. The stock payment ratio of bonuses and the timing of when shares can be sold were key issues between labor and management during this round of bargaining.
If, as the securities market projects, SK hynix's annual operating profit reaches 250 trillion won this year, 25 trillion won, or 10% of operating profit, will fund PS. If that is simply divided among roughly 35,000 employees, it averages about 700 million won per person. Actual payments vary by rank and individual evaluation. Assuming an average PS of 700 million won per person, under the default method, about 280 million won would be paid in cash, about 280 million won worth of stock would be received in the same year and could be sold, and the remaining roughly 140 million won would be deferred over two years.
Labor and management also agreed on measures to overcome crises in case the company posts a loss. On the premise of job security, they included in the agreement the method and level of deferring part of wages and making a lump-sum payment of the deferred wages when the company returns to profit. SK hynix also deferred part of wages during the memory market slump in 2023, then confirmed the return to profit and paid them.
An SK hynix representative said, "The starting point of this agreement is that labor and management prepared a breakthrough on their own without relying on outside arbitration or systems," adding that the tentative deal includes not only the performance bonus payment method but also crisis-overcoming measures during losses and plans for participation in social value.
The company will also pursue a social contribution program using a 1-to-1 matching grant method, in which the company donates the same amount when a member donates part of their PS. Participation is at the member's discretion. Welfare items such as meal price increases and family event support programs were also included in the tentative agreement.
The union will decide whether to finally approve the tentative agreement through a delegates' vote.