SK Hynix tentative wage deal pays 60% of bonuses in inventory

SK Hynix reached a tentative wage settlement with its South Korean staff on Thursday that may shift nearly all of this 12 months’s profit-sharing bonuses from money into firm inventory, a big change from final 12 months’s all-cash association.

Underneath the deal, staff would obtain 40% of their bonus in money and 40% in SK Hynix inventory that may be bought instantly. The remaining 20% can be distributed as deferred inventory compensation — half after one 12 months and the remainder after two years. Workers can also select to take a bigger portion in inventory, as much as 100%, the corporate stated. For the primary 12 months of the brand new association, staff with private monetary wants might be allowed to decide for a bigger money payout.

The tentative settlement nonetheless requires approval from union members, an SK Hynix spokesperson stated.

The AI growth has despatched SK Hynix’s earnings hovering, making the scale of this 12 months’s potential payouts a central difficulty in negotiations. Staff are set to obtain a mean bonus of 779 million received ($547,000) for 2026, in accordance with Reuters. Administration’s preliminary proposal to shift greater than half of bonuses into inventory drew opposition from some staff involved about share worth volatility, as SK Hynix inventory hit a document excessive in June earlier than declining on investor uncertainty.

The deal preserves the profit-sharing formulation established final 12 months, underneath which SK Hynix units apart 10% of annual working revenue for the bonus pool, locked in for a decade. What modified is the combination: final 12 months, 80% of the bonus was paid in money within the award 12 months, with the remaining 20% deferred in money over two years.

The settlement additionally features a 6.3% enhance in base wages. A separate clause would enable the corporate to defer as much as 3% of wages if SK Hynix data a loss, with deferred quantities paid in a lump sum as soon as the corporate returns to revenue.

“Labor and administration got here up with their very own breakthrough with out counting on exterior mediation or techniques,” SK Hynix stated in an announcement.

Kim Yong-jin, a administration professor at Sogang College, stated an all-cash payout would have strained the corporate’s funds and risked a public backlash. “It could drain the corporate’s money reserves and will have triggered a public backlash over what could also be seen as lavish payouts,” he informed Reuters.

The wage settlement got here a day after SK Hynix introduced a plan to repurchase and cancel 40 trillion received ($28.6 billion) of its personal shares — the most important treasury share cancellation in South Korean listed firm historical past — and dedicated to allocating greater than 50% of free money movement generated between 2025 and 2027 to shareholder returns. SK Hynix inventory rose 13% on Thursday.