SK Hynix Changes 'Productivity Incentive' Criteria... Differential Payment Based on Operating Profit Margin

Shared Within SK hynix Through Labor-Management Agreement

SK Hynix has decided to pay productivity incentives (PI) for achieving production targets based on operating profit margins. The payment rate can go up to 150%, and if conditions are met, the second half PI is expected to be paid early next year.

On the 30th, the SK Hynix labor union held a briefing session to share the recently agreed PI payment criteria improvement plan with union members.

The existing PI system paid 100% of the base salary when the company achieved its production target each half-year. However, since the payment was only made if there was an operating profit, there were internal opinions that the system needed improvement.

Accordingly, SK Hynix labor and management comprehensively considered various factors such as the business environment, payment capacity, and employee motivation, and agreed on a plan to pay PI differentially according to the operating profit margin when the production target is achieved.

Factory view at SK Hynix Icheon Campus / Photo by SK Hynix

The agreement includes a provision that under the condition of achieving the production target, the payment rate will be 150% if the operating profit margin is 30% or higher. If the operating profit margin is between 15% and 30%, the payment rate will be 125%, and if it is between 0% and 15%, the payment rate will be 100%.

Also, even if the operating profit margin is negative, PI will be paid up to a certain range. If the operating profit margin is between -10% and 0%, the payment rate will be 50%, and if it falls below -10%, no PI will be paid.

Earlier, SK Hynix recorded a loss in the first half, so PI was not paid. Instead, to boost employee morale, a crisis overcoming encouragement bonus of 1.2 million KRW was paid.

The payment of the second half PI will be determined based on various conditions. If conditions are met, it will be paid in January next year.

Meanwhile, SK Hynix recorded consolidated sales of 9.0662 trillion KRW in the third quarter. This is a 17% decrease compared to the same period last year. It increased by 24% compared to the previous quarter.

The operating loss in the third quarter was 1.792 trillion KRW. The deficit was reduced by more than 1 trillion KRW compared to the previous quarter. The operating loss ratio was 20%.

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