SK hynix. [AFP]
SK hynix. [AFP]

SK hynix and its union reached a tentative wage and collective bargaining agreement after two months of negotiations, only to see it rejected by a member vote five days later. Workers voted down a proposal that would have shifted performance bonuses from full cash payouts to a system under which 60 percent would be paid in company shares.

The tentative agreement for the 2026 wage and collective bargaining cycle, put to a vote by the full-time workers' union covering the Icheon and Cheongju plants, failed by just 25 votes, according to industry sources Tuesday. The result was 49.9 percent in favor (7,510 votes) against 50.08 percent opposed (7,535 votes). Of the 16,038 eligible voters, 15,045 cast ballots, for a turnout of 93.81 percent. Voting ran from 6 a.m. Monday through 9 a.m. Tuesday.

The technical and clerical workers' union was still conducting its own vote as of Tuesday, meaning its outcome remains to be seen. But with the full-time union already having rejected the deal, a return to the bargaining table appears unavoidable.

Management and the union are widely expected to revisit the details, particularly the structure of performance bonus payments, which drew the most employee dissatisfaction. SK hynix has precedent for this: tentative agreements were also rejected and renegotiated in both 2023 and 2024.

The two sides had reached the tentative agreement on Friday, replacing a system of full cash bonus payouts with a new structure of 40 percent cash and 60 percent company stock. Because the deal amended an arrangement agreed upon last year that had been set to remain in place for 10 years, the company held a full membership vote rather than the usual delegate vote.

Under the proposed terms, 40 percent of the profit-sharing bonus would be paid in cash and another 40 percent in SK hynix shares. The remaining 20 percent would be deferred and paid out in equal installments of 10 percent over two years. An exception was built in for 2027, the first year of the new system, allowing the stock portion to be paid in cash instead — meaning employees could receive up to 80 percent of their bonus in cash next year.

Management and the union also reached a tentative agreement on a provision allowing the company to defer up to 3 percent of wages in the event of a net loss, framed as a gesture of solidarity during difficult times.

Given the significant shift from full cash to a majority stock-based payout, the tentative deal included safeguards. The share price used to calculate the stock portion would be determined by comparing closing prices at three specific points and applying the lowest of the three, allowing employees to receive more shares for the same bonus amount. The three reference points are the closing price on the day SK hynix announces its January operating results, the closing price on the February cash bonus payment date, and the closing price on the April stock grant date.

The deal also included a provision to compensate employees in cash if the share price falls immediately after the stock is granted. If the total value of shares received on the first day of the grant falls below the originally promised bonus amount based on that day's closing price, the company would make up the difference in cash.

Before the vote, the union held late-night information sessions to walk members through the tentative agreement. Over the weekend, the two sides added further provisions: the company would cover taxes arising from any stock-loss compensation payments, and SK hynix employees would be exempt from brokerage commissions through an MOU with a securities firm.

Despite those efforts, employees appear to have been dissatisfied with the reversal of last year's agreement and the shift in the bonus structure. Many members raised concerns that the proportion of the bonus paid in company stock was too high.

A shareholders' meeting also emerged as a complicating factor. Because the proposal moved from full cash payouts to a majority stock-based system, the revised Commercial Act requires the change to be approved at a general shareholders' meeting. That requirement fueled anxiety among employees, who worried that if shareholders rejected the agenda item — on grounds that the bonus was excessive — the stock-based payout could be disrupted.

The union has said that if the shareholders' meeting rejects the proposal, bonuses would be paid in cash instead. Management is understood to have said it would do its best to secure shareholder approval.


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