These Days, "SK Hynix Men" Are the Most Enviable... A 100 Million Won Salary Brings a Hefty 150 Million Won Bonus

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

SK Hynix, which has posted record-high earnings, has raised its compensation framework by paying its members the highest performance bonuses in its history.

According to the industry on the 4th, SK Hynix has set this year’s profit sharing (PS) payout rate at 2964%. 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 roughly 148.2 million won in performance bonuses.

View of SK Hynix headquarters in Icheon, Gyeonggi Province. Photo by Yonhap News

The move is seen as a strategy to secure core semiconductor talent in a stable manner and prevent brain drain, thereby maintaining its competitive edge, by offering top-tier compensation levels in the industry.

PS is SK Hynix’s flagship performance bonus program, paid once a year using 10% of annual operating profit as the funding source, depending on yearly results. Starting with this year’s payout, new payment criteria, established through labor-management consultations in the second half of last year, have been applied.

The key point of the new criteria is the removal of the previous PS ceiling, which had been capped at a maximum of 1000%, and the use of the full 10% of the previous year’s operating profit as the funding source. The company has decided to maintain this standard for the next 10 years.

Of the performance bonus amount calculated for each individual, 80% is paid in a lump sum at the time of payment, while the remaining 20% is deferred and paid over two years. This structure is similar to the long-term incentive schemes adopted by major global semiconductor companies. In fact, Taiwan’s TSMC, the world’s No. 1 foundry (contract semiconductor manufacturing) company, also uses roughly 10% of its annual operating profit as the funding source for performance bonuses.

Within the industry, some assess that this overhaul of the performance bonus system could help ease the outflow of science and engineering talent and the concentration of applicants on medical schools. It is also being analyzed as a meaningful attempt in terms of securing the semiconductor industry’s long-term competitiveness.

SK Hynix headquarters in Icheon-si, Gyeonggi-do. Provided by Yonhap News

An SK Hynix official said, “As competition in AI semiconductors intensifies, not only capital expenditure but also the securing and retention of core talent have emerged as key elements of competitiveness,” adding, “We expect that a differentiated compensation system will enable us to retain outstanding talent, attract global talent, and secure a long-term competitive edge.”

SK Hynix posted record results last year with 97.1467 trillion won in revenue and 47.2063 trillion won in operating profit. Accordingly, the operating profit to be used as the PS funding source is estimated at around 4.7 trillion won. However, since 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 1500%, combining 1000% in PS and 500% in special performance bonuses. This year, thanks to both improved results and the revamped制度, the total performance bonus amount has nearly doubled.

In addition, SK Hynix is operating a shareholder participation program that allows employees to choose to receive part of their PS in the form of treasury shares. Up to 50% can be received as company stock, and if the shares are held for one year, an additional 15% of the purchase amount is paid in cash. The company is also pushing to introduce a制度 that would allow PS to be accumulated in a defined contribution (DC) type retirement pension plan.

Meanwhile, on January 30, the company paid the productivity incentive (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 for the first half, the total performance-based payout calculated on last year’s results reaches 3264%.

Securities firms expect SK Hynix to continue its record-breaking earnings streak this year as well. With supply of high bandwidth memory (HBM) 3E (5th generation) and HBM4 (6th generation) to major customers such as Nvidia projected to expand, some forecasts suggest that annual operating profit could reach between 100 trillion won and 130 trillion won.

This content was produced with the assistance of AI translation services.