Stock compensation for corporate chiefs and executives jumps 65.7% in one year, with Samsung accounting for 317 agreements

Stock compensation has become far more common among South Korea’s major business groups. The Fair Trade Commission said 15 groups signed 585 agreements last year to award shares to controlling owners, their relatives or executives, a 65.7% increase from 353 agreements the previous year.

The agreements provide shares when conditions such as performance targets or a required period of service are met. Samsung drove much of the increase, signing 317 new agreements with executives, more than half the total. Six groups, including Hanwha, Doosan, Amorepacific, Woongjin, Eugene and Kyobo Life Insurance, also signed agreements with controlling owners or relatives who served as executives. Hanwha’s Kim Dong-kwan, Kim Dong-seon and Kim Dong-won, as well as Woongjin Vice Chairman Yoon Sae-bom and Eugene President Yoo Seok-hoon, were identified as second-generation controlling-family members covered by such agreements.

Kim Min-ah of the Fair Trade Commission’s corporate-group information analysis team said the agency was continuing to monitor the arrangements because of the possibility that stock-payment agreements could become concentrated among controlling families.

The commission’s analysis covered 89 owner-controlled business groups and 3,293 affiliated companies among groups with assets of at least 5 trillion won. Coupang was excluded because it is challenging the designation of Coupang as its controlling entity. The groups’ average internal ownership ratio fell slightly to 61.4% from 62.4% a year earlier. Controlling families directly held an average 3.5%, while affiliated companies held 55.5%.

The figures reflect the gap between ownership and control in South Korea’s conglomerates. Families can exercise influence through relatives and affiliated companies despite owning a limited direct stake, creating concerns about private-benefit transactions and conflicts with minority shareholders. Companies covered by the Fair Trade Act’s private-interest regulations exceeded 1,000 for the first time, reaching 1,047, or 31.8% of all affiliated companies. That was 89 more than a year earlier, partly because eight newly designated large business groups increased the number of regulated companies.

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We are continuing to monitor this in case stock-payment agreements become concentrated among controlling families.