Union to hold general vote on renegotiated bonus deal Tuesday and Wednesday

'Add-back' mechanism introduced to protect future bonus pool

Calls grow for greater transparency on how 10% operating profit pool is calculated

Final agreement text to be released only after member vote

SK hynix headquarters in Icheon [Newsis]
SK hynix headquarters in Icheon [Newsis]

SK hynix and its union have agreed to increase the cash portion of the company's profit-sharing bonus, known as PS, while also strengthening safeguards to ensure employees are not disadvantaged by stock and deferred payment arrangements, according to industry sources.

However, some employees are raising concerns that the deal — set to run through 2034 — lacks sufficient transparency around how the PS pool, defined as 10 percent of operating profit, is actually calculated. Calls are also growing for the union to release the final agreement text before, rather than after, the ratification vote.

The union held information sessions for members over the weekend ahead of a general vote on the renegotiated bonus deal scheduled for Tuesday and Wednesday, industry sources said Monday.

SK hynix and its union had earlier reached a tentative agreement to pay out PS as 60 percent stock and 40 percent cash, funded by 10 percent of operating profit. That deal was rejected by a margin of 25 votes in a membership ballot, prompting the two sides to return to the negotiating table.

The renegotiated proposal raises the cash component significantly. The previous structure of 40 percent cash, 40 percent stock and 20 percent deferred payment has been revised to 50 percent cash, 30 percent stock and 20 percent deferred. Assuming the total PS payout remains the same, employees would receive 25 percent more in immediate cash than under the original plan.

Of the 50 percent cash portion, employees may convert some into stock in 10 percentage-point increments if they choose, giving individuals some flexibility to adjust the balance between cash and stock.

The renegotiated deal also includes additional protections responding to employees' demands for more cash. According to the union, in any year where the PS payout falls below 1,000 percent of base salary — equivalent to roughly 50 percent of annual compensation — the entire amount will be paid in cash, with no stock or deferred components.

In years when the PS pool is relatively small, the plan prioritizes immediate cash over long-term deferred payments and stock. The agreement also guarantees that previously accrued deferred payments will be honored even if the company posts a loss.

A separate mechanism has been put in place to prevent bonus payouts from reducing future PS pools. Under a so-called "add-back" arrangement, any costs from paying employee and executive bonuses that reduce operating profit will be added back to the operating profit figure used to calculate the following year's PS pool. The measure is designed to stop the cost of one year's PS payout from shrinking the resource base for the next.

For example, if bonus payments generate 1 trillion won ($743 million) in costs, that amount would be added back to the operating profit figure, and 10 percent of the resulting total would be set aside as the PS pool for the following year.

The union told members the agreement, including these provisions, is expected to remain in effect through 2034.

Last September, labor and management agreed to a 10-year arrangement under which 10 percent of annual operating profit would fund PS payouts and the previous cap of 1,000 percent of base salary would be abolished. The current renegotiation is framed not as a reversal of that agreement but as an adjustment of the specific payout terms within the same framework.

Even so, some employees say the detailed calculation method behind the "10 percent of operating profit" formula has not been adequately explained, despite the system being set to govern compensation for years to come.

At the information sessions, the union explained that while 10 percent of operating profit forms the PS pool, not all of that pool goes directly to rank-and-file employees as PS. The pool also covers executive compensation and other costs, sources said.

Employees are calling for a clearer breakdown of exactly which items are included in the 10 percent pool, how much is allocated to each, and how much ultimately reaches workers as PS.

Questions are also being raised about when the final agreement text will be made public. The union has said it will release the document only after the ratification vote concludes.

Internally, some members argue that because the compensation system could remain in place through 2034, they should be able to review the precise wording of the final agreement — including the definition of the PS pool, the calculation criteria and the applicable period for each payout method — before casting their votes.


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