Park Jung-ho’s general meeting “Announcement of plans to convert intermediate holding companies as soon as they become concrete”
Dividend ↑ with the introduction of quarterly dividends, paving the way to agree to transition to an intermediate holding company
Top Daily Reporter Jin-Hwi Lee = SK Telecom announced its willingness to formulate a plan to convert to an intermediate holding company for the first time and to pursue it within this year. In the first half of the year, the company plans to announce a specific plan for transition to an intermediate holding company.
At the 37th regular shareholders’ meeting of SK Telecom held at SKT Tower in Euljiro, Seoul on the 25th, CEO Park Jeong-ho said, “SK Telecom’s current share price is not only KRW 100 trillion in all subsidiaries, but also our corporate value is not sufficiently covered even when the business portfolio is combined.” I’ve been thinking for a long time that the governance structure needs to be reorganized, and I think it can be done this year.”
CEO Park continued, “Because it is an important responsibility to provide greater value to shareholders, we will make sure to implement (government structure reform) this year so that the benefits return. As it cannot be provided accurately from the point of view, I will create a separate session and explain it as soon as it becomes concrete.”
The transition to an intermediate holding company is SK Group’s long-awaited project to expand SK Hynix’s business. When the transition to an intermediate holding company passes by next year, SK Telecom will have to expand its 20.1% stake in SK Hynix to 30% in accordance with the amendment to the Fair Trade Act.
SK Telecom’s transition to an intermediate holding company is expected to be a process of converting the investment division into an intermediate holding company after splitting it into business and investment divisions. Concerns about shareholder backlash over SK Telecom’s market cap, which will decrease in the short term due to the division of the business, will be resolved with the introduction of quarterly dividends.
On this day, SK Telecom passed a proposal to change the articles of incorporation to introduce quarterly dividends instead of the existing interim dividends. With the introduction of quarterly dividends, the annual dividend, which was 10,000 won for six years, is expected to increase from this year. CEO Park said, “SK Telecom receives 10,000 won a year as an interim dividend, but it is evaluated that the quarterly dividend meets the global standard, so we will switch to quarterly dividends. I see.”
Quarterly dividends are a representative shareholder-friendly policy and a measure to strengthen the stock price. Quarterly shareholders can receive dividends, which makes it an attractive means of holding investors. There are many companies that offer quarterly dividends overseas, but only a few companies, including Samsung Electronics, are implementing them in the domestic KOSPI market due to concerns about financial burdens.
Seung-woong Lee, a researcher at Ebest Securities, said, “SK Telecom has demonstrated its willingness to boost stock prices, such as purchasing treasury stocks and promoting subsidiary IPOs. “There are only 5 companies that are implementing the company, and the stock price in the year that the quarterly dividend began to increase by an average of 31.3% has recorded a high rate of return.”
At the regular shareholders’ meeting of SK Telecom that day, shareholders’ dissatisfaction with the stock price also came out. One shareholder who attended the shareholders’ meeting said, “CEO Park Jung-ho received a lot of incentives this time.”
He added, “You said that you will improve shareholder value last year, but the stock price has not risen, so the stockholders are very angry.
In response, CEO Park Jung-ho said, “Complaining about the stock price is a legitimate story, and increasing stocks is much more important than receiving special incentives.
CEO Park continued, “I am also frustrated, so I am thinking of (government structure) reorganization as a last resort to improve these areas.” “We will make sure to realize that plan so that our market value can fully capture the portfolio value. “He added.
SK Telecom’s share price is KRW 249,000 based on the closing price on the 24th, with a market cap of about KRW 20 trillion. SK Telecom’s share price has peaked at 291,000 won on November 30, 2018 out of the last three years, and has been recovering after falling to 164,000 won on March 27 last year.
Meanwhile, SK Telecom passed all the agendas for approval of the 2020 financial statements ▲ approval of the 2020 financial statements ▲ changes to the articles of incorporation related to quarterly dividends ▲ granting of stock options ▲ appointment of internal directors ▲ appointment of outside directors ▲ approval of the compensation limit for directors.
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