SK Hynix reached a tentative wage agreement with its South Korean workers on Thursday that would shift the majority of this year’s profit-sharing bonuses from cash into company stock, a significant change from last year’s all-cash arrangement.
Under the deal, workers would receive 40% of their bonus in cash and 40% in SK Hynix stock that can be sold immediately. The remaining 20% would be distributed as deferred stock compensation — half after one year and the rest after two years. Employees may also choose to take a larger portion in stock, up to 100%, the company said. For the first year of the new arrangement, workers with personal financial needs will be allowed to opt for a larger cash payout.
The tentative agreement still requires approval from union members, an SK Hynix spokesperson said.
The AI boom has sent SK Hynix’s earnings soaring, making the size of this year’s potential payouts a central issue in negotiations. Workers are set to receive an average bonus of 779 million won ($547,000) for 2026, according to Reuters. Management’s initial proposal to shift more than half of bonuses into stock drew opposition from some workers concerned about share price volatility, as SK Hynix stock hit a record high in June before declining on investor uncertainty.
The deal preserves the profit-sharing formula established last year, under which SK Hynix sets aside 10% of annual operating profit for the bonus pool, locked in for a decade. What changed is the mix: last year, 80% of the bonus was paid in cash in the award year, with the remaining 20% deferred in cash over two years.
The agreement also includes a 6.3% increase in base wages. A separate clause would allow the company to defer up to 3% of wages if SK Hynix records a loss, with deferred amounts paid in a lump sum once the company returns to profit.
“Labor and management came up with their own breakthrough without relying on external mediation or systems,” SK Hynix said in a statement.
Kim Yong-jin, a management professor at Sogang University, said an all-cash payout would have strained the company’s finances and risked a public backlash. “It would drain the company’s cash reserves and could have triggered a public backlash over what may be seen as lavish payouts,” he told Reuters.
The wage agreement came a day after SK Hynix announced a plan to repurchase and cancel 40 trillion won ($28.6 billion) of its own shares — the largest treasury share cancellation in South Korean listed company history — and committed to allocating more than 50% of free cash flow generated between 2025 and 2027 to shareholder returns. SK Hynix stock rose 13% on Thursday.
