"Loyalty" and "Let's Hang Up a Photo of Chey Tae-won"
Excitement Sweeps Through the Company
Unprecedented Performance Bonuses
Frustration Grows: "Why Not Us?"
Chairman Chey Tae-won of SK Group, Chairman Lee Jae-yong of Samsung Electronics. Photo by Asia Economy Database
SK Hynix has reached a wage agreement that includes an unprecedented performance bonus, causing a stir throughout the industry. While the atmosphere within the company is celebratory, voices of relative deprivation and dissatisfaction are emerging at competitor Samsung. As Hynix effectively signals the start of 'performance bonuses without an upper limit,' significant repercussions are expected for other companies preparing for their own negotiation seasons.
"Loyalty" "Let's Hang Up a Picture of Choi Taewon"... Excitement Inside the Company
According to the tentative agreement reached between SK Hynix labor and management on September 1, the cap on the excess profit-sharing (PS) bonus, which was previously set at up to 1,000% of base salary, will be abolished, and wages will be increased by 6.0%. In addition, a new PS cap will be set at 10% of annual operating profit, with 80% of the calculated amount paid in the current year and the remaining 20% paid over the next two years at 10% each year. Considering this year's projected operating profit (approximately 39 trillion won) and the number of employees (33,625), it is calculated that each employee could receive a performance bonus exceeding 100 million won.
Once news of the agreement broke, the company’s internal community was filled with cheers. On September 2, the anonymous workplace community Blind saw a flood of encouraging posts such as, "Starting voluntary overtime from today," "I'll work overtime to speed up the development schedule by even a day," "Now it's really time to work hard," and "Let's get to work. I heard Samsung is trying to catch up. Let's develop and produce with dedication."
Employees also shared their joy by posting messages praising Choi Taewon, Chairman of SK Group. Some employees uploaded Chairman Choi's ID photo, joking, "If you hang this at home, money will come in." Comments such as "Let's buy the frame together," "Order complete," "We should look at it every day and be grateful," "I love you," and "From now on, Choi Taewon and I are one. Any criticism of Choi Taewon will be considered an attack on me" continued in a relay of 'loyalty certification,' which has become a kind of game within the company.
Record-High Bonuses Lead to "Why Not Us?" Frustration
However, as SK Hynix introduces the new standard of 'removing the performance bonus cap,' the industry is facing a dilemma. This is because labor unions at other companies preparing for negotiations are now more likely to make similar demands to management. Since the Hynix case has become a 'benchmark,' there are predictions that expectations for performance bonuses across the industry will rise significantly.
In fact, on September 2, the day after the SK Hynix agreement, the Samsung Group Super Enterprise Labor Union (Super Enterprise Union) sent an official letter to Lee Jae-yong, Chairman of Samsung Electronics, demanding improvements to the performance bonus system. In the letter titled "Outdated Performance Bonus System and an Unchanging Company," the Super Enterprise Union pointed out, "SK Hynix recently decided to pay a performance bonus equivalent to 10% of operating profit, while Samsung Electronics still adheres to the non-transparent EVA (Economic Value Added) method for its performance bonus system." The letter continued, "The EVA-based system is so opaque that no employee knows how it is calculated. There is no other way to describe it than as a 'blind performance bonus system.' The company has operated a task force to improve the bonus system and held several meetings, but there have been no announcements or results since."
Currently, Samsung Electronics and its affiliates use the excess profit incentive (OPI, formerly PS) system, which is based on annual operating profit, but the calculation is determined by the EVA method. EVA is calculated by subtracting capital costs (such as corporate tax and investment funds) from operating profit. The Super Enterprise Union stated, "(With the EVA method,) even if operating profit is high, if a certain target is not met, the bonus could be zero, and there is still a cap." The union urged, "Employee morale and trust in the company at Samsung Electronics have already hit rock bottom. At the very least, show some willingness to change."
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