SK Hynix strikes tentative wage deal, shifting majority of bonuses to equity
The South Korean chipmaker has agreed to pay at least 60% of this year’s worker bonuses in company stock, a move that follows a period of record earnings driven by the artificial intelligence boom.
SK Hynix has reached a tentative wage agreement with its South Korean workforce, stipulating that at least 60% of this year’s bonuses will be disbursed in company shares rather than cash. The deal marks a significant shift from last year’s arrangement, which saw the company pay out bonuses entirely in cash. According to Reuters calculations, employees are set to receive an average bonus of 779 million won, approximately $547,000, for 2026.
The agreement includes a 6.3% increase in base wages and introduces a clause allowing the company to defer up to 3% of wages should it record losses. Under the new structure, 40% of the bonus will be paid in cash, while 40% will be issued in stock that can be cashed out immediately. The remaining 20% will be paid in stock as deferred compensation, with half released after one year and the remainder after two years.
SK Hynix shares rose 4% before the bell on Thursday following the announcement. The tentative deal remains subject to a vote by union members, though the company stated that labour and management reached a breakthrough without relying on external mediation. The agreement comes after a period of soaring earnings driven by the AI boom, which had led to significant bonus payouts for employees.
Last year, SK Hynix agreed to share 10% of its annual operating profit with workers in cash under a 10-year agreement. However, management’s proposal to pay more than half of this year’s bonuses in shares initially faced opposition from workers concerned about the volatility of the company’s stock. The shares had hit a record high in June on excitement over the AI boom before slumping on fears that excessive spending was not yielding sufficient returns.
Kim Yong-jin, a management professor at Sogang University, described the outcome as a win-win solution. He noted that an all-cash payment would have placed both SK Hynix and its workers in a difficult position, potentially draining the company’s cash reserves and triggering public backlash over what might be seen as lavish payouts.
The wage deal follows a separate announcement on Wednesday, in which SK Hynix said it would buy back and cancel 40 trillion won ($28.6 billion) of treasury shares. The company also plans to allocate more than 50% of free cash flow generated between 2025 and 2027 to boost shareholder returns.
