What They Said is a regular series on the quotes Korea is talking about.
The South Korean company SK Hynix, the third-largest semiconductor company in the world, has made headlines in the past couple of weeks. It started with a seemingly innocent news article on January 28, 2021, about SK Hynix confirming a performance-based bonus for its executives and employees of 400% of their base pay.
The following day, an email was circulated within the company:
Dear CEO Lee Seok-hee,
This is TL Kim XX, a member of SK Hynix. I have not specified the team I am affiliated with, because the content of this email is completely unrelated to my team and its other members. I do not have a single complaint about my tasks or the working environment of my team.
You may still consider me a newly hired employee, as this is only my fourth year (less than three full years) at the company. But with a heavy heart I’ve decided to write a few words, because I believe that the joy and gratitude I felt on joining the company, as well as the trust that SK Hynix shows me, have been dwindling.
I am not representing any other person or group, and I am not writing this email because I am a member of the labor union.
I also believe that someone has to make this kind of attempt to express the bottled-up feelings and work to restore the relationship between the company and its members.
Since the “Notice on 2020 PS (Profit Sharing) Payment” was posted companywide at around 5pm on January 28, complaints have been erupting from all members of the company. Some may think of this as something that happens every year and consider it a storm that will pass. But I am frustrated about this situation in which I cannot get a clear answer and no one is telling us anything. I believe that most of the members of our company would agree with this.
If the company can take this opportunity to give clear answers and establish systematic standards, I believe that company members’ complaints and situations arising from insufficient understanding between the two parties would dramatically decrease. 
— SK Hynix employee surnamed Kim, January 30, 2021.
This company employee further requested clarification regarding several issues that had been raised on the company’s anonymous message board—how the EVA (economic value added, which is the standard used to determine the PS bonus pay) is calculated; whether the rumors about the comments of an executive were true; why the company did not respond to the article about SK Hynix’s PS bonus pay, which was uploaded five minutes after the notice had been issued within the company with a note that its contents should not be disclosed to outsiders; whether the company is aware that, despite the HR team telling new recruits that SK Hynix would pay them as much as Samsung would, it has only done so in 2018 and has not kept its promise in later years; and why the PS bonus pay was much less than that of even its smaller competitors.
This news was confusing to the general public at first—it seemed that SK Hynix employees were getting upset about what is clearly described as a “bonus payment”. If a company issues bonuses, shouldn’t the employees simply say “Thank you” instead of asking, “Why is this bonus so small?”
Well, it turns out, SK Hynix had had a pretty good year. On January 29, 2021, the company announced that it had recorded ₩31.9 trillion in sales and ₩5.13 trillion in operating profit, which were, respectively, 18% and 84% increases compared to the previous year. Interestingly, in the previous year, SK Hynix had posted an operating profit of just ₩2.71. Due to the low profit, the company had given the employees 400% of their base pay for their “special contribution” in lieu of the PS bonus. This year the company’s operating profit had nearly doubled, and yet the employees received the same sum (400% of their base pay) for their PS bonuses.
On top of this, Samsung transparently revealed the PS payment for their own employees, which was 47% of the salary (on the same scale, SK Hynix’s PS payment translates to 20% of the salary), meaning Samsung employees received over ten million dollars more than SK Hynix employees in 2020.
The email was addressed to all SK Hynix employees and its CEO Lee Seok-hee. The company first responded to the email through a message from HR, warning the employees about circulating unverified rumors which could potentially violate company regulations. The company’s labor union then issued an email, expressing full support for the employee who had sent the first email and the questions they had posed. Meanwhile, the voices of discontent grew louder, with many people posting on message boards about quitting and going to Samsung instead.
On February 1, over 20 members of the company’s labor union staged a protest at a ceremony for the completion of the new M16 fabrication plant at SK Hynix attended by Chey Tae-won, the chairman of the SK Group. At the ceremony, Chey remarked that he’d thought hard about the controversy surrounding the PS bonus and announced that he would return his salary from the previous year, which totaled ₩300 million. He also said that he hoped this would create an opportunity to resolve the current issue.
However, many SK Hynix employees saw this merely as the company trying to appease them instead of addressing the issues raised. On the following day, Lee Seok-hee, the CEO of SK Hynix, issued an apology over the company’s intranet:
As the CEO, I would like to sincerely apologize once again for the fact that I have not been able to understand your concerns and communicate with you.
Taking this opportunity, I have asked myself about the prerequisites for the “happiness” that we are pursuing and looked back on the efforts we have made. The most important thing that is needed for us to grow our happiness together would be the trust between the company and its members. In addition, I now clearly understand that the members of the company wish for “fairness” and “transparency” from the company in order to build that trust.
From now on, we will focus more on “fairness” and “transparency” as the direction of our management as we work together.
— Lee Seok-hee, CEO of SK Hynix, February 2, 2020.
Lee also promised four things: 1. To improve the standard by which PS payments are calculated; 2. To issue company stocks to employees; 3. To issue welfare points worth ₩3 million that can be used as cash online; and 4. To innovate the method, level, and system of communication between the management and employees.
This was still not enough to calm the employees. The company labor union asserted that Chairman Chey’s turning in his previous year’s salary and Mr. Lee’s issuing of 300 million welfare points and company stock were not “real solutions” to the problem, as they only confirmed the fact that the company would not increase the PS bonus pay and still not disclose information about the way EVA was calculated and factored into the PS payment.
Things then became more interesting as Samsung and Micron Technology issued job recruitment notices for experienced workers, which would provide new career paths for disgruntled SK Hynix employees.
On February 4, SK Hynix met with the union to discuss the issue further. After hours of deliberation, an agreement was reached—the management decided to change the standard for calculating the PS pay from EVA (whose details remained undisclosed) to 10% of the company’s operating profit.
So things appear to have calmed down a bit at SK Hynix, but an exodus of relatively new workers (first to third years) to Samsung and other companies seems inevitable. This may have been a small fiasco at one company, but it marked the rise of millennials and Gen-Z in South Korea.
Until now, PS bonuses were considered bonuses—money that was given to people at a company’s discretion. In South Korea’s semiconductor industry, they began to be implemented more widely when they became a success factor for Samsung. SK Hynix’s researchers (Ph.Ds) in their first year receive a base pay of about ₩2.5 million (about $2270). The base pay certainly has not reflected the rate of inflation, and instead most people in the field now consider the PI (productivity incentive, given out twice a year) and PS as part of their salary.
And the keywords in this controversy were “fairness” and “transparency”, which are values upheld by South Korean millennials and Gen Z . When such values are not upheld, these relatively young employees in their 20s and 30s are not hesitant to speak up—one had the audacity to email the CEO, asking for clarification as to why the PS bonuses for the employees were so low (when the executives received bonuses that were double the amount they’d received the previous year).
The PS bonus controversy at SK Hynix has led to controversies surrounding bonus payments at other companies as well, including Samsung and LG, and it has also sparked a conversation in business about communication between management and employees. It will be interesting to see how the business landscape in Korea changes as more and more people begin to speak up for their own peace of mind.