[미디어SR 정혜원 기자] In SK Hynix, which achieved an operating profit of 5 trillion won last year, there is a continuing backlash from executives and employees over performance pay. In particular, a wider controversy arose when a low-year employee sent a public e-mail to CEO Lee Seok-hee, the CEO, saying, “Please specify the criteria for paying incentives.” However, SK Hynix explained that it was difficult for management to reflect incentives that reflected operating profit.
An official from SK Hynix explained to the Media SR on the 2nd, “The incentive payment system is formulated according to the set calculation rules,” and “It is something that must be followed by the rules set by the company, and it is not a part to be changed through consultation by members.”
On the 28th of last month, the management announced that 400% of the basic pay (1/20 of the annual salary) and 20% of the annual salary will be paid in PS according to the incentive pay calculation system based on the 2020 annual performance. PS is often referred to as an incentive, and when the previous year’s performance exceeded the target performance at the beginning of the year, it is determined according to a separate calculation method established in-house.
This is a different item from the Productivity Encouragement Fund (PI), which is paid twice a year in the first and second half of the year, and it is known that a manager-level employee with an annual salary of 60 million won will receive a PS of around 12 million won.
Compared to the average wage of all employees, it is not a small incentive, but the employees have rebelled greatly against the level of PS payment by the management. They are complaining that the PS level paid by the management does not reach the performance pay of Samsung Electronics’ semiconductor division, which is classified as the same industry, as well as the performance pay of SK Hynix partners.
Accordingly, the management made a position to explain the incentive payment system, but it was reported that the employees were still not convinced. Employees are known to strongly protest, saying,’Aren’t only senior executives receiving thousands of PS’ and’What are you trying to communicate with the opportunity to ask questions at the briefing session?’
In particular, this year, the controversy grew as an employee, who had been in the company for 4 years, revealed his real name and openly questioned the incentive payment system to CEO Lee Seok-hee.
The author asked:
“Is it possible to disclose the calculation method and calculation method for the index called’EVA’ (economic value added, operating profit excluding corporate tax and capital expenses), which is the basis for paying incentives, and if it is impossible, what specific parts are difficult to disclose? I wonder. In addition, I am curious about what percentage of the maximum basic pay can be paid for incentives and special contributions by achieving the EVA index every year.”
“If you say that the reason why the incentive pay is lower than that of’Silicon Works’ and’Wonik IPS’ is simply because the standard of EVA was introduced, then the standard of EVA is an unreasonable criterion that undermines the wage system and the incentive (compensation for excess profit) standard of members. I wonder if you don’t think.”
However, a company official said to the media SR, “We cannot confirm whether the company has disclosed the method of calculating incentives as requested by the employee.”
Samsung Electronics, which is classified in the same industry as SK Hynix, announced that it will pay 47% of its annual salary to employees in the semiconductor business division (DS) as an OPI based on last year’s performance. Based on the basic salary, it is equivalent to 940%, which is more than doubled. Of course, in the industry, it is difficult for Samsung Electronics to regard SK Hynix as a’competitor’ in terms of scale and technology. However, the employee who wrote the e-mail sent to the company argued that SK Hynix is paying the same or less PS, even compared to Wonik IPS and Silicon Works, which have a smaller sales volume compared to SK Hynix.
With the spread of Corona 19 in 2020, non-face-to-face demand surged, and SK Hynix recorded good performance of 31 trillion KRW in sales and KRW 5 trillion in operating profit. Compared to the previous year, sales increased by 18% and operating profit by 84%. Silicon Works recorded 1 trillion won in sales and 94.2 billion won in operating profit for the first time since its inception last year, and sales increased 33.9% and operating profit 99.4% year-on-year. The securities firm’s consensus on Wonik IPS’ earnings, which has not yet announced its final results, is expected to increase by 16.58% and 21.97% YoY, respectively, to KRW1.26 trillion in sales and KRW2185 billion in operating profit.
However, the management explains that it is difficult to pay PS according to the amount of profit every year. PS is an incentive paid when it exceeds the’profit’ level set at the beginning of the year, as it means excess profit distribution. In extreme terms, even if sales doubled from the previous year, if the target profit margin was not met, the payment could not be made.
In addition, a company official said to the Media SR, “There may be additional expenditures such as loan interest and investment, and there are parts that require long-term expenditures, so it is difficult to calculate incentives based solely on operating profit.” The same is true.”
Nevertheless, the response of “the accumulated thing has exploded” is predominantly in the anonymous applications for workers. An industry official who served at SK Hynix told Media SR that “400% of the basic salary actually corresponds to a reduction in annual salary.” said.
Moreover, SK hynix did not want to pay incentives equivalent to PS (excess profit distribution) in 2019 due to poor performance. I have a bar. In 2017-2019, during the semiconductor super boom, SK Hynix set the same level of incentives as Samsung Electronics.
In contrast, this year, SK Hynix employees’ performance pay was only 600% of the basic salary. 600% is PS, which is 400% of basic salary and 100% of PI (Productivity Encouragement Fund) paid on a semi-annual basis. According to an industry insider, this year’s employee incentives have fallen below half of the normal level.
Isn’t the real dissatisfaction with incentives?…’Unfavorable change of employment rules’ without employee consent
Moreover, it seems that the accumulated dissatisfaction of employees does not simply stop at’reduction in performance pay’. According to the new personnel rules, the management can freely calculate the’achievement salary’ that constitutes the annual salary, which can be disadvantageous to employees. In accordance with Article 94 of the Labor Standards Act, when preparing or changing the employment rules, the consent of the union organized by a majority of workers must be obtained. However, the management is belatedly getting consent.
Accordingly, an employee is petitioning on the 21st of last month that the management violated the rules for changing employment. As of 7 pm on the 2nd, 6369 people agreed to the petition.
SK Chairman Choi Tae-won, who received complaints, “I will return the compensation”… CEO Lee Seok-hee also responded
Meanwhile, SK Group Chairman Choi Tae-won made a speech with the intention of’returning the compensation received from SK Hynix’ at the congratulatory speech on the completion of the M16 of the state-of-the-art semiconductor production line held at SK Hynix’s Icheon headquarters on the 1st. At the time, Chairman Tae-won Choi was known to have expressed his opinion on the purpose of saying, “I think it is a regrettable task to overcome,” regarding incentives, and “I think it was necessary to empathize or even try to blame myself.”
The annual salary of SK Hynix that Chairman Choi decided to return is estimated at 3 billion won. Chairman Choi is one out of 151 SK Hynix unregistered executives and receives salaries, bonuses, and incentives. The industry estimates that the total remuneration received by Chairman Choi in 2019 is about 3 billion won, and it is expected to be similar last year.
If 3 billion won is distributed equally to 28,000 employees of SK hynix, about 100,000 won per employee will be received.
In addition, on the 2nd, SK Hynix CEO Lee Seok-hee is known to have responded to the backlash of employees through an in-house message. President Lee said, “I am very sorry for your regrets and disappointments because the PS level does not meet the expectations of the members.” It is known to have revealed. In addition, he mentioned the plan, “We will expand communication on the expected level and scope of PS throughout the year.”