SK Hynix Production Workers Reject 60% Stock Bonus Plan by 25 Votes

Technical and office workers approve deal with 66.2% support

Production workers reject it by 25 votes, leaving members nearly evenly split

Renegotiation to focus on explaining and refining the stock payout structure

A tentative wage and collective bargaining agreement at SK Hynix has put the chipmaker’s stock-based bonus plan back on the bargaining table after its production workers union voted it down. Even so, the outcome at another union and the razor-thin margin among production workers suggest the next round of talks will focus less on abandoning the compensation framework and more on explaining and refining its complex payout structure.

Technical and office workers approve; production workers reject by 25 votes

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

Of 16,038 eligible voters in the production workers union, 15,045 cast ballots, for turnout of 93.81%. The gap was 25 votes, or 0.16 percentage point. While the proposal failed, the result does not show members breaking decisively to either side.

The two unions bargain separately, so each vote applies independently. Their results cannot be formally combined. Still, a simple tally across both unions shows overall support outnumbered opposition. With about two-thirds of technical and office workers backing the proposal and production workers split almost evenly, the vote does not amount to a broad rejection of stock-based compensation.

Up to 80% in cash in the first year to ease the transition

The tentative agreement includes a 6.3% increase in base pay, expanded welfare points, higher shift allowances and a wider promotion rate. The provision that drew the most attention was the structure for profit-sharing bonuses, or PS.

Under the proposal, 40% of PS would be paid in cash and the remaining 60% in company shares. Of that 60% share portion, 40% would be distributed in the same 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 stock price on the day SK Hynix announces annual preliminary earnings, the closing price on the cash PS payment date, and the closing price on the stock payment date. That method uses a price relatively favorable to employees and is intended to reduce the burden of stock-price swings.

For the first year of the program, the 2026 PS payout would also include a cash option. Employees could choose to receive in cash the 40% portion of shares scheduled for same-year payment, allowing them to take as much as 80% of total PS in cash. The measure is aimed at easing the shift toward stock-heavy compensation and accommodating individual funding needs.

After the rejection, explanation and refinements become the key issue

The production workers union’s rejection appears to have reflected the complexity of the payment structure and a preference for cash more than the size of the compensation itself. Unlike cash, shares fluctuate in value with the stock price, and part of the award would not be received for one to two years. Employees also must consider more factors than under a traditional cash bonus, including how shares are calculated, when they can be sold and the tax treatment.

A newly formed integrated union also shared an internal message saying acceptance of the tentative deal was effectively unavoidable, people familiar with the matter said. That union does not currently have bargaining rights and is expected to take part in negotiations only from next year.

Because the technical and office workers union approved the same proposal, the renegotiation is set to center on details such as payout ratios, the deferral schedule, sale timing and tax treatment. The production workers union also rejected initial tentative agreements in 2023 and 2024 before reaching final settlements after additional talks.

In the latest bargaining round, labor and management are expected to discuss ways to explain the deferred schedule, sale timing, taxes and other complex elements more clearly while reducing uncertainty in implementation. If the two sides reach a new tentative agreement, the production workers union will hold another member vote.

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