With Revised Performance Bonuses and Record High Forecasts... All Eyes on SK Hynix Performance Bonuses

SK Hynix to Announce Bonus Scale by Month-End
'150% of Base Salary' Likely
Reform Plan Set Last Year Reflects Profit Flow for the First Time
Q2 Earnings to Be Released on the 25th
Rival Samsung Electronics Also Closely Watching

Amid growing expectations that SK Hynix will achieve record-breaking performance in the second quarter of this year, there is also an increasing anticipation for performance bonuses both inside and outside the company.

The headquarters of SK Hynix in Icheon City [Image source=Yonhap News]

According to industry sources on the 24th, SK Hynix is scheduled to announce its second-quarter business results on the 25th and will determine the scale of performance bonuses based on these results, notifying employees by the end of this month.

Industry insiders suggest that the performance bonus could reach "150% of the base salary." This figure is based on the performance bonus system restructured through a labor-management agreement last October. At that time, SK Hynix’s labor and management agreed to differentially pay the Productivity Incentive (PI) based on operating profit margins if productivity targets were met. Previously, PI was paid up to 100% of the base salary only when productivity targets were achieved and operating profit was generated. The new system allows PI to be paid under more varied circumstances, including cases where operating profit margins are negative but certain criteria are met. The maximum payment rate was also increased from 100% to 150% of the base salary. The "150% of the base salary" expectation stems from this background.

According to company officials, this revised plan is being applied for the first time under the current operating profit trend in this second quarter. The expectation has grown stronger as forecasts suggest the company will announce record-breaking results for Q2. Securities firms project that SK Hynix recorded sales of KRW 16.1886 trillion and operating profit of KRW 5.1923 trillion in the second quarter, driven by increased demand for high-bandwidth memory (HBM) and high-performance, high-capacity NAND flash. Sales are expected to surpass the KRW 13.811 trillion recorded in Q2 2022, setting a new quarterly record, while operating profit is anticipated to approach the all-time high of KRW 5.5739 trillion recorded in Q2 2018.

It is reported that Samsung Electronics is also paying close attention to SK Hynix’s performance bonuses. If SK Hynix’s performance bonus reaches 150% of the base salary, it would be twice the payment rate of Samsung Electronics. Earlier this month, Samsung Electronics’ Device Solutions (DS) division announced internally that it would pay performance bonuses up to 75% of the base salary. There is concern that a significant gap in performance bonuses could lower employee morale, so Samsung Electronics is expected to closely monitor SK Hynix’s bonus payment trends. The National Samsung Electronics Labor Union (JeonSamNo), which resumed wage negotiations with the company the day before, is also reportedly demanding improvements to the performance bonus system, citing SK Hynix’s system as a reference.