SK Hynix Performance-Based Pay Restructuring Plan Rejected… US-Iran Truce Report and Canadian Retaliatory Tariffs

A report from a Russian state news agency claimed that the US and Iran agreed to a truce, including free passage through the Strait of Hormuz. This report positively impacted the US stock market at closing and garnered market attention.

However, Reporter Kwon Soon-woo pointed out that the report lacks credible information, such as specific details of the truce or sources. To date, there has been no official confirmation or additional evidence, making its reliability low.

According to a New York Times report, some signs of diplomatic tension easing have been detected, including the return of diplomats stationed in the Middle East and the relaxation of emergency measures at local embassies. This raises hopes for a general easing of tensions in the Middle East. Although there has not yet been significant progress in the market, there is a tendency to interpret these movements as positive signs.

The Canadian government decided to impose retaliatory tariffs of up to 50% on US products worth 20 billion dollars. This is a countermeasure to the US imposing tariffs on Canadian products.

Items subject to tariffs include US steel, aluminum, and apparel, with high tariff rates of up to 50%. Home appliances and cheese are expected to face a 25% tariff. This conflict reportedly began with US President Donald Trump's provocative social media posts regarding Lake Ontario.

The Canadian Finance Minister stated that the purpose of these retaliatory tariffs is not to increase tariff revenue but to protect Canadian companies and reduce imports of US products. This demonstrates a firm commitment to protecting domestic industries.

The Finance Minister emphasized the defense of national interests and strongly criticized US trade policy, stating, "We have no choice but to stand up to actions that weaponize economic integration partnerships."

Reporter Kwon Soon-woo predicted that as the US midterm elections in November approach, various foreign conflict issues, including Canadian tariffs, are likely to continue to be reported in the news. This is because the US government, facing declining approval ratings, may pursue strong foreign policies, such as declaring a state of emergency, to overcome political risks.

Therefore, this tariff conflict with Canada is likely to be more about political maneuvering to gain an advantage than about structural change. The possibility of foreign conflicts continuously being used for political purposes is being raised.

The performance-based pay restructuring plan, which was provisionally agreed upon by SK Hynix labor and management, was thwarted by the union's opposition. With 7,510 votes in favor and 7,535 against, it was rejected by a mere 25 votes, and labor-management conflict is expected to intensify.

The rejected plan included provisions to pay 40% of the excess profit sharing (PS) in cash and the remaining 60% in stock.

The rejected performance-based pay restructuring plan primarily stipulated that 40% of the excess profit sharing would be paid in cash, and the remaining 60% would be paid in stock. Of the 60% in stock, 40% could be sold immediately, and the remaining 20% was agreed to be paid over two years.

Additionally, a clause was included allowing for 40% of the stock portion of the 2026 performance-based pay to be optionally received in cash.

The company emphasizes that paying performance-based bonuses in stock is an incentive to enhance shareholder value, based on the premise that if employees work hard to increase company value, receiving stock is more beneficial than cash. The intention is for employees to contribute to the company's growth and share in its fruits.

On the other hand, some shareholders express disappointment at employees' refusal of stock payments and preference for cash. This leads to concerns about employees' commitment to company growth and future value creation.

Controversy has arisen over the inclusion of a loss compensation clause for performance-based stock payments. There was a provision to compensate employees for losses incurred due to stock price declines.

Some shareholders criticize that employees, who are the entities responsible for increasing the company's value, demanding compensation for losses due to stock price drops is contrary to responsible management. This raises fundamental questions about the nature of performance-based pay and the role of employees.

Reporter Kwon Soon-woo mentioned that, unlike the SK Hynix labor-management conflict, Hyundai Motor's labor and management found common ground instead of striking. Hyundai Motor's labor and management focused on extending the retirement age for the future and preparing for the electric vehicle transition without striking this year. This signifies that both labor and management recognized that decreased productivity and sales impact would directly lead to their own reduced profits, and thus found a realistic compromise.

Hyundai Motor's labor and management were criticized for frequent strikes in the past, but recently, in a rapidly changing industrial environment, they have understood that strengthening the company's competitiveness directly correlates with the interests of union members and are moving towards cooperation. This case offers valuable lessons for SK Hynix's labor and management to consider.