Unions tentatively agree to receive 60% of bonuses in treasury shares

Labor and management of SK hynix have reached a tentative agreement on 2026 wages, under which 60 percent of performance bonuses will be paid in treasury shares, according to industry officials Thursday.

SK hynix’s labor and management drew significant attention across the Korean industry last year when they agreed to use 10 percent of the company’s operating profit as a funding pool for performance bonuses and maintain the system for 10 years.

Tensions escalated recently, however, after management proposed paying part of the bonuses in shares instead of entirely in cash, prompting the unions to threaten collective action. With the tentative agreement, the chipmaker has avoided immediate disruptions such as a general strike, but the risks of conflict remain because employees, dissatisfied with the decision, are moving to form a new union.

SK hynix’s unions held delegate meetings on Thursday afternoon and informed union members that the tentative agreement calls for 60 percent of performance bonuses to be paid in treasury shares and the remaining 40 percent in cash.

Of the portion paid in shares, 40 percentage points can be sold in the year of payment, while the remaining 20 percentage points will be paid later.

SK hynix is expected to post 250 trillion won ($179 billion) in operating profit this year, which would create a 25 trillion won performance bonus pool under the 10 percent agreement. As the company now has approximately 35,000 employees, the agreement would mean a roughly 700 million won bonus per employee, of which 420 million won would be paid in treasury shares.

The unions plan to hold delegate votes soon to decide whether to give final approval to the tentative agreement.

SK hynix management has been holding separate negotiations since June with three labor unions: an office workers’ union and two production workers’ unions. The three unions bargain individually with management, but their agreements remain broadly aligned to ensure fairness across the workforce.

At the center of the latest negotiations was how the performance bonuses would be paid.

SK hynix’s labor and management agreed last year to pay profit-sharing bonuses funded by 10 percent of the company’s operating profit for 10 years without a cap.

However, as the bonuses were expected to reach hundreds of millions of won for some employees, the scheme also drew controversy. Some groups complained of a growing sense of relative deprivation, while debates emerged over shareholder returns and how excess profits should be distributed. Labor unions at other companies also began demanding similar schemes, fueling broader social tensions.

Samsung Electronics introduced a special performance bonus funded by 10.5 percent of its operating profit, but decided to pay it in treasury shares. SK hynix also proposed paying up to 70 percent of the bonuses with treasury shares during this year’s wage negotiations.

The unions, however, opposed the proposal, arguing that receiving performance bonuses in shares could make the value of their compensation fluctuate depending on the company’s stock price.

SK hynix’s stock price peaked on June 22 by closing at 2.919 million won, but plunged to 1.5 million won on Wednesday, amid concerns that the artificial intelligence infrastructure boom may be nearing its peak.

They also argued that bringing changes to a compensation scheme that the two sides agreed to last year would undermine trust between labor and management.

On Aug. 13, the three unions released a joint statement calling for a direct decision from SK Group Chairman Chey Tae-won, saying the unions “will respond with collective actions if management dodges a decision.”

As the unions reached the tentative agreement, the risks of immediate disruption were eased, but tensions could resurface now that employees have formed the new union.

On Aug. 13, the company’s fourth union was established, describing itself as a unified labor union representing both office and production workers.

In its operating principles, the new union said its top priority is to ensure that performance bonuses are paid in cash, stressing that it “opposes any attempt to replace all or part of the cash-based bonuses with shares.”

As of Thursday morning, the union had secured more than 3,300 members, representing less than 10 percent of SK hynix’s workforce. It said its goal is to become the company’s majority union.

Explore More

• Q.
• Q.
• Q.