Record Earnings at SK Hynix
Performance Bonus Set at 2,964%
Profit Sharing Payout Ratio Confirmed at 2,964%
First Application of Scrapping the PS Cap
148.2 Million Won on a 100 Million Won Salary
Record-High Bonuses Based on 47 Trillion Won in Operating Profit
SK Hynix, which posted its highest earnings ever, has raised its compensation scheme to a new level by paying its members a record-high performance bonus.
According to the industry on the 4th, SK Hynix has finalized this year’s profit sharing (PS) payout ratio at 2,964%. The payment date is the 5th. This is equivalent to about 29.6 times the base salary, meaning that an employee with an annual salary of 100 million won will receive approximately 148.2 million won in performance bonuses.
The move is seen as a strategy to secure key semiconductor talent in a stable manner and to block brain drain in order to maintain a competitive edge, by offering top-tier compensation in the industry.
PS is SK Hynix’s representative performance bonus program, paid once a year by using 10% of annual operating profit as the funding source, depending on yearly results. From this year’s payout, new payment criteria agreed between labor and management in the second half of last year have been applied.
The core of the new criteria is the removal of the previous PS cap, which had been set at a maximum of 1,000%, and the use of the full 10% of the previous year’s operating profit as the funding source. The company has decided to maintain these criteria for the next 10 years.
Eighty percent of each individual’s performance bonus is paid in a lump sum at the time of payment, while the remaining 20% is deferred over two years. This is similar to the long-term incentive structures used by major global semiconductor companies. In fact, Taiwan’s TSMC, the number one player in the foundry industry, also uses about 10% of its current-year operating profit as the funding source for performance bonuses.
Within the industry, there is also an assessment that this overhaul of the performance bonus system could help ease the outflow of science and engineering talent and the heavy shift toward medical schools. It is being analyzed as a meaningful attempt in terms of securing the semiconductor industry’s long-term competitiveness.
An SK Hynix official said, “As competition in AI semiconductors intensifies in earnest, not only capital expenditure but also securing and retaining core talent have emerged as key elements of competitiveness,” adding, “Through a differentiated compensation system, we expect to retain outstanding talent, attract global talent, and secure a long-term competitive edge.”
SK Hynix achieved record-breaking results last year with sales of 97.1467 trillion won and operating profit of 47.2063 trillion won. Accordingly, the size of operating profit to be used as the PS funding source is estimated at around 4.7 trillion won. However, as the operating profit of NAND subsidiary Solidigm is excluded from this year’s PS calculation, the actual funding is expected to be around 4.5 trillion won.
Previously, based on last year’s payout, SK Hynix paid a total performance bonus of 1,500%, combining PS of 1,000% and a special performance bonus of 500%. This year, the scale of the performance bonus has nearly doubled, driven by both improved earnings and the overhaul of the system.
In addition, SK Hynix is operating a shareholder participation program that allows employees to receive part of their PS in the form of treasury shares. Up to 50% can be received as treasury shares, and if held for one year, an additional 15% of the purchase amount is paid in cash. The company is also pushing to introduce a scheme that allows PS to be accumulated in a defined contribution (DC) retirement pension plan.
Meanwhile, on the 30th of last month, the company paid productivity incentives (PI) for the second half of last year at the maximum level of 150% of base salary. PI is an incentive paid when semiannual production targets are met. Including the amount paid in the first half, the total performance-related payout calculated based on last year’s results reaches 3,264%.
Securities firms expect SK Hynix to continue its record-breaking performance this year as well. With an anticipated expansion in supply of HBM3E (5th generation) and HBM4 (6th generation) to major customers such as Nvidia, some forecasts suggest that annual operating profit could reach between 100 trillion won and 130 trillion won.
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