After SK Hynix’s labor and management agreed to receive 60% of a performance bonus tied to 10% of operating profit in company stock, “N% performance bonus in stock” is emerging as a new bargaining chip for autoworker unions in South Korea. Demands for expanded stock-based compensation are surfacing as a new flashpoint in this year’s wage and collective bargaining negotiations at South Korea’s Hyundai Motor (005380.KS) and Kia (000270.KS).
According to industry sources on the 21st, Hyundai Motor’s union is demanding performance bonuses equivalent to 30% of last year’s net profit. Kia’s union is also seeking performance bonuses funded by 30% of last year’s operating profit. Notably, unlike last year, Kia’s union has demanded stock compensation of at least 246 shares per member (worth approximately 40 million won, or approximately $28,000). The figure is based on the share price at the time the union’s demands were drafted.
Management’s proposal and established practice, by contrast, remain centered on cash compensation. Hyundai Motor, which serves as the benchmark for labor-management negotiations within Hyundai Motor Group, has typically paid 15 to 25 shares of company stock upon reaching wage agreements. This year’s initial management proposal also included 15 shares. Kia’s management likewise offered 45 shares, leaving a wide gap with the union’s demand.
Although the proposal to pay a percentage of performance bonuses in stock was not formally placed on the agenda in this year’s negotiations, observers suggest the dynamics could shift significantly starting next year. Resentment on the shop floor over “executive-centric stock compensation (stock options)” has been growing, and with Hyundai Motor and Kia share prices climbing on expectations surrounding the robotics business, there is a spreading perception that employees should share in the company’s growth gains.
The Metal Workers’ Solidarity, affiliated with Hyundai Motor’s union, recently used its newsletter to compare the stock compensation of Hyundai management’s negotiating committee members (up to 177 shares) against management’s offer to workers (15 shares), urging expanded compensation. The rise in Hyundai Motor and Kia share prices earlier this year, fueled by expectations for the robotics business and other initiatives, has also contributed to the growing demand for stock-based compensation, as employees increasingly believe they should share in the company’s future growth.
An industry source said, “The ‘company stock payout’ trend that began in the semiconductor industry is spreading to automakers,” adding, “Demands to pay a portion of performance bonuses in stock could emerge as early as next year.”