The proposed 2026 wage and collective bargaining agreement was defeated with 50.08 percent, or 7,535 members, voting against it, the union said Tuesday. Another 7,510 members, or 49.92 percent, voted in favor.
Turnout reached 93.81 percent, with 15,045 of the union's 16,083 members participating in electronic voting between Monday morning and 9 a.m. Tuesday.
The razor-thin rejection came five days after SK hynix and the union reached a tentative agreement following two months of negotiations.
The deal included a 6.3 percent wage increase but drew particular attention for a major change in how the company's profit-sharing bonus, known as PS, would be paid.
Under the proposal, 40 percent of PS would be paid in cash, while the remaining 60 percent would be distributed in SK hynix shares.
Of the stock portion, shares equivalent to 40 percent of the total bonus could be sold in the year of payment. The remaining 20 percent would be deferred over two years, with 10 percent distributed each year.
For PS covering 2026 and scheduled to be paid early next year, employees would have been allowed to receive the immediately available 40-percent stock portion in cash instead, allowing them to take as much as 80 percent of the bonus in cash during the first year of the new system.
The rejection sends both sides back into negotiations, with the structure of PS payments likely to remain the central issue.
SK hynix has faced similar setbacks before. Tentative wage agreements were rejected by union members in both 2023 and 2024, forcing labor and management to reopen negotiations.
The latest vote carries greater financial significance because the size of employee bonuses has ballooned along with SK hynix's earnings from high-bandwidth memory, or HBM, used in artificial intelligence accelerators.
Last year's agreement removed the previous ceiling on PS and established a formula allocating 10 percent of annual operating profit to the bonus pool for 10 years.
Under that framework, 80 percent of PS was to be paid in cash in the year of payment and the remaining 20 percent deferred over the following two years.
The tentative agreement reached last week would therefore have moved employees much more heavily into SK hynix stock just as the company is seeking to align workers more closely with its long-term earnings and share-price performance.
The vote also highlights the tension in that approach.
SK hynix shares have been volatile despite booming HBM earnings and remain below their recent peak, making stock-based compensation more sensitive for employees accustomed to receiving most of their profit-sharing bonus in cash.
A newly established unified union has separately made preservation of cash-based PS payments one of its priorities.
The employee debate is unfolding alongside an equally aggressive effort by SK hynix to increase returns to shareholders.
A day before the tentative labor agreement was announced, the company approved a record 40 trillion won ($28.6 billion) share buyback and cancellation program, the largest ever announced by a South Korean listed company.
SK hynix plans to buy about 24.07 million shares, equivalent to roughly 3.3 percent of its outstanding stock, between Aug. 20 and Nov. 19 and cancel all of them.
The company also raised its shareholder-return commitment, saying it plans to return more than 50 percent of cumulative free cash flow generated between 2025 and 2027 through dividends, buybacks and share cancellations.
Its previous policy called for shareholder returns within 50 percent of cumulative free cash flow.
Investors initially welcomed the move, sending SK hynix shares 12.67 percent higher to 1.69 million won last Thursday after a 9.75 percent fall in the previous session. Shares are down 5 percent Tuesday morning to 1,584,000 won, nearly halved from their June 25 peak of 2,987,000 won.
The sharp swings have underscored how expectations surrounding the AI memory boom have become increasingly demanding even as SK hynix continues to report exceptional earnings.
The company is juggling three competing claims on that cash generation: employee compensation, shareholder returns and tens of trillions of won in investment needed to expand HBM and advanced memory capacity.
AJP Takeaways
- SK hynix union members rejected the tentative wage deal by just 25 votes, forcing labor and management back into negotiations.
- The main sticking point is a proposed shift in profit-sharing bonuses, with 60 percent to be paid in company shares rather than predominantly in cash.
- The dispute comes as SK hynix tries to distribute its AI-memory windfall among employees and shareholders while continuing heavy investment in HBM capacity.
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