Chip manufacturer SK Hynix announced on Thursday a preliminary agreement on wages with its South Korean employees. Under this agreement, workers will receive at least 60% of their bonuses for the current year in the form of company shares, unlike the fully cash compensation they received last year.
Thanks to the AI boom, SK Hynix's profits have grown significantly, leading to impressive bonuses for employees. According to Reuters estimates, the average payout to employees for 2026 will be 779 million won ($547,000 USD).
Kim Young-jin, a professor of management at Sogang University, noted that this is a mutually beneficial decision. He suggested that a full cash payout would put both SK Hynix and its employees in a difficult position, as it could deplete the company's cash reserves and provoke a negative public reaction due to what might be perceived as excessive payouts.
A representative of SK Hynix stated that this agreement is subject to approval by the union members. Previously, last year, SK Hynix agreed to share 10% of its annual operating profit with employees in cash as part of a ten-year agreement.
However, this year, the management's proposal to pay over half of the bonuses in stocks met with objections from some employees who feared the volatility of SK Hynix shares. The company's stock reached a record high in June amid the AI frenzy before falling due to concerns that too much money was being spent without sufficient compensation.
Under the terms of the current agreement, employees will receive 40% of their bonuses in cash and 40% in shares. A portion of the shares can be cashed out immediately. The remaining 20% will be paid as deferred compensation: half in one year, and the other half in two years.
The agreement also includes a 6.3% increase in base salary and a clause allowing the company to defer up to 3% of salaries if SK Hynix incurs losses.
In a statement from SK Hynix, it was indicated that 'workers and management found a breakthrough independently, without relying on external mediation or systems.' The company also reported that on Wednesday it plans to buy back and cancel 40 trillion won ($28.6 billion USD) in treasury stock and direct more than 50% of the free cash flow generated between 2025 and 2027 towards increasing shareholder returns. These steps contributed to a 13% rise in SK Hynix shares on Thursday.