Record Boom Sparks Clash as SK Hynix Proposes Stock Incentives and Wage Adjustments

Labor tensions are rising at SK Hynix as the company, riding a wave of record-breaking earnings, proposes paying part of employee performance bonuses in company stock and introducing a new wage system that would allow pay adjustments during downturns.

According to the minutes from the 4th plenary session of wage and collective bargaining released by the SK Hynix labor union, management has maintained its stance on paying more than half of the performance bonuses in shares, along with imposing restrictions on selling them for a certain period.

The company also presented a new wage system that would enable temporary wage adjustments if the company records losses due to worsening memory market conditions.

The union has rejected the proposals, arguing that paying bonuses in stock undermines the spirit of the performance-based compensation system that was painstakingly agreed upon last year, and that adjusting wages during deficits is effectively a wage cut.

This conflict is drawing further attention as it comes at a time when the company is posting all-time high earnings.

SK Hynix has continued its record-breaking performance this year, leading the market in high-bandwidth memory (HBM) for artificial intelligence.

Securities analysts forecast that this year's annual operating profit will reach a record high of 250 trillion won.

During negotiations last year, labor and management agreed to scrap the payment cap for the Profit Share (PS)—which allocates 10 percent of operating profit as a bonus pool—and to maintain this system for 10 years.

Under the current system, 80 percent of the performance bonus is paid immediately in cash, while the remaining 20 percent is distributed over two years.

If this system is maintained, actual payouts will vary depending on job rank and individual performance, but a simple calculation dividing 10 percent of operating profit by the total number of employees translates to an average of about 700 million won per person.

Management reportedly argues that because the memory semiconductor industry is a cyclical sector marked by alternating booms and busts, paying part of the bonuses in stock allows employees to share in the long-term fruits of corporate value growth, while a preemptive wage structure is necessary to prepare for industry downturns.

In fact, SK Hynix posted an operating loss of 7.7 trillion won in 2023 during a semiconductor downturn, marking its largest deficit since the company's founding.

Labor and management plan to hold their 5th plenary session next week to continue negotiations on key issues, including the proportion of stock bonuses, sales restrictions, and wage adjustments during deficits.

However, given the wide gap between the two sides, significant friction is expected to persist throughout the negotiation process.

(Reported by Kim Minjeong | Video by Seo Byeong-wook | Graphics by Lee Su-min | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.