SK Hynix Bonus Plan With 60% Stock Component Fails at Production Union by 25 Votes

Tentative deal wins 66.2% approval from technical and office workers' union

Production union rejects it by 25 votes, leaving members almost evenly split

Renegotiation set to focus on explaining and refining the stock payout structure

A tentative wage and collective bargaining agreement at SK Hynix was rejected by the union representing production workers, putting the chipmaker's stock-based bonus plan back on the negotiating table. Still, voting by other employee groups and the razor-thin margin among production workers suggest the next round of talks may center less on overturning the compensation framework than on explaining and refining its complex payout structure.

Technical and office workers approve; production union rejects by 25 votes

Industry officials said on Aug. 27 that SK Hynix's technical and office workers' union approved the tentative 2026 wage and collective bargaining agreement in a recent vote, with 66.2% in favor. The same proposal was rejected by the production union, with 7,535 votes against, or 50.08%, and 7,510 votes in favor, or 49.92%.

Of the production union's 16,038 eligible voters, 15,045 cast ballots, for turnout of 93.81%. The margin was just 25 votes, or 0.16 percentage point. While the proposal was rejected, the result showed little tilt to either side.

The two unions bargain separately, so each vote applies independently. The results cannot be combined procedurally, but a simple aggregate indicates support outweighed opposition. With about two-thirds of technical and office workers backing the plan and production workers split almost evenly, the vote does not point to broad employee rejection of stock-based compensation itself.

Up to 80% can be received in cash in the first year

The tentative agreement includes a 6.3% increase in base pay, expanded welfare points, higher shift allowances and a broader promotion rate. The most closely watched provision was the payment method for profit-sharing bonuses, or PS.

Under the proposal, 40% of PS would be paid in cash and the remaining 60% in company stock.

Of that 60% stock portion, 40% would be delivered in the current year and could be sold immediately. The remaining 20% would be paid later, split into 10% after one year and 10% after two years. The number of shares would be calculated using the lowest of three closing prices: the day annual preliminary earnings are announced, the day the cash PS is paid, and the day the stock is distributed. The structure is designed to apply a relatively favorable price for employees and reduce exposure to share-price swings.

For the 2026 PS, the first year of the program, the proposal also includes a cash option. Employees could choose to receive in cash the 40% of stock scheduled for immediate delivery, allowing them to take as much as 80% of total PS in cash. The measure is aimed at easing the burden of a sudden shift toward stock-heavy compensation and reflecting individual funding needs.

Talks resume after rejection, with explanation and revisions key

The production union's rejection appears to have been driven more by the complexity of the payout method and a preference for cash than by the size of the compensation package itself. Unlike cash, the value of stock changes with the share price, and part of the allotment would not be received for one to two years. Employees also have more to consider than under a traditional cash bonus, including how the share count is calculated, when shares can be sold and tax treatment.

A newly launched integrated union also shared internally that acceptance of the tentative agreement was effectively unavoidable, according to industry officials. That union does not currently hold bargaining rights and is expected to join negotiations only after next year. Because the technical and office workers' union approved the same proposal, the next round of talks may focus on the payout mix, the deferral schedule and the timing of share sales.

The production union also rejected initial tentative agreements in 2023 and 2024 before reaching final deals after renegotiation. In the additional talks this time, labor and management are expected to discuss how to explain the deferred schedule, sale timing and tax treatment more clearly while reducing uncertainty around implementation. If the two sides produce a new tentative agreement, the production union will hold another ratification vote.

Hong Min-seong, Hankyung.com reporter mshong@hankyung.com