Key Takeaways SK Hynix shares declined 4.9% on Tuesday following union rejection of a proposed compensation package The vote was extremely tight, with 50.08% of 15,045 employees opposing the
Shares of SK Hynix tumbled 4.9% to ₩1,611,000 on Tuesday following a razor-thin union vote that rejected management’s proposed wage package.
The voting outcome was remarkably close. Among 15,045 union members who participated, exactly 50.08% opposed the agreement. The deciding margin came down to merely 25 ballots.
The proposed package, which had been negotiated the previous week, featured a 6.3% salary bump. Additionally, it sought to restructure the company’s profit-sharing bonus program, allocating 40% as cash payments and 60% as company shares.
The bonus composition became the primary point of contention. A significant portion of the workforce resisted the idea of receiving more than half their performance bonuses in equity, expressing apprehension about the unpredictability of stock valuations.
SK Hynix shares reached an all-time peak in June, fueled by optimism surrounding artificial intelligence-driven demand. Since then, the stock has retreated amid growing skepticism about whether AI investments are generating sufficient returns.
According to a previous agreement established last year, 10% of SK Hynix’s yearly operating profit is earmarked for employee profit-sharing bonuses. This arrangement spans a decade.
Under the current framework, 80% of these bonuses are distributed as cash within the same fiscal year. The balance of 20% is spread across a two-year period.
The company’s proposal to transition toward greater equity-based compensation encountered strong opposition from employees who preferred maintaining higher cash distributions.
SK Hynix did not respond to requests for comment from Reuters at the time of publication.
The circumstances echo challenges faced by Samsung Electronics, which resolved comparable tensions earlier this year.
In May, Samsung reached an agreement with its labor union on performance-based compensation, preventing a potential work stoppage. Samsung committed to directing 10.5% of its yearly semiconductor operating profit toward special bonuses for chip division employees.
These bonuses would be distributed as company equity, though workers faced restrictions on immediate sales.
Both Samsung and SK Hynix have faced heightened attention regarding their profit distribution strategies this year, following robust financial performance driven by AI-fueled demand for memory semiconductors.
Samsung’s profit sharing announcement earlier in the week fell short of investor expectations, contributing to declines in both Samsung and SK Hynix shares on Monday.
As the world’s second-largest memory chip manufacturer, SK Hynix has substantially benefited from surging demand for high-bandwidth memory chips utilized in AI computing infrastructure.
The broader South Korean equity market also experienced downward pressure on Tuesday. The KOSPI index declined roughly 3%, with semiconductor stocks bearing the brunt of losses.
Market sentiment toward the chip sector remained subdued in anticipation of Nvidia’s quarterly earnings report scheduled for later in the week, widely viewed as a critical indicator of AI chip market conditions.
SK Hynix stock was down 4.9% as of 0036 GMT, while the KOSPI index showed a 2.2% decrease during the same timeframe.
The post SK Hynix (SKHY) Shares Plunge 5% as Workers Reject Wage Package by Narrow Margin appeared first on Blockonomi.
