SK Hynix Strikes Labor Union Deal to Pay Half of Bonuses in Cash

(Bloomberg) -- SK Hynix Inc. has struck an agreement with its union to pay out half of all profit-sharing bonuses in cash, resolving a dispute that threatened to disrupt production at the world's second-biggest memory chipmaker.

About 57% of the labor group approved a revised wage and collective bargaining agreement, SK Hynix said in a statement Wednesday. In the latest pact, 50% of profit-sharing bonuses will be paid out in cash and half in company shares, replacing a previously proposed 40-60 cash-stock split. The company's shares climbed more than 2% in Seoul.

The agreement resolves tensions at a company that supplies the high-bandwidth memory Nvidia Corp. and other chipmakers need for accelerators fundamental to AI development. The ratification follows about two weeks of re-negotiations after union members rejected an initial, tentative agreement in August, with 50.08% voting against the deal.

A key sticking point had been management's proposal to shift a substantial portion of profit-sharing bonuses from cash to shares, including restricted stock that employees wouldn't have been able to sell immediately. The union initially opposed the proposal, arguing that it would undermine a profit-sharing framework agreed upon last year.

Under that framework, SK Hynix agreed to remove a ceiling on its profit-sharing bonus and allocate 10% of annual operating profits to employees for 10 years. The size and structure of such bonuses have become a closely watched issue not only for SK Hynix and its staff, but also across South Korea as the booming semiconductor sector generates record profits.

The two sides had also agreed that employees would temporarily defer 3% of salaries if SK Hynix posts a loss, with full pay restored once business rebounds.