Large Business Groups' Share Payment Agreements Surge 66% in One Year... 585 Deals Including Samsung

Circular Ownership Loops Down 84%
Control Gap Remains: 3.5% Equity, 60% Group Control

The number of stock grant agreements concluded by large business groups with their controlling shareholders and related executives has increased by more than 60% in just one year.

According to the “2026 Analysis of Stock Ownership Status of Designated Business Groups,” released by the Korea Fair Trade Commission on September 4, among business groups with controlling shareholders, a total of 585 stock grant agreements were signed with executives who are relatives of the controlling shareholders last year. This represents a surge of 65.7% compared to 353 cases in the previous year.

This dramatic increase in stock grant agreements is mainly attributable to a broad expansion of stock-based compensation for performance incentives across business groups, including 317 new agreements by Samsung. Particularly, there were 19 agreements in 6 business groups involving the controlling shareholder or 11 of their relatives who also serve as executives. Doosan, AmorePacific, and Kyobo Life Insurance signed agreements directly with their controlling shareholders, while Hanwha, Woongjin, and Eugene entered into stock grant agreements targeting second-generation controlling shareholders.

1,202 Circular Shareholding Chains Dissolved... Simplification of Governance at Sajo, Taekwang, and KG

Chronic circular shareholding structures were greatly improved due to the voluntary efforts of leading companies. The number of circular shareholding chains among all business groups subject to disclosure fell to 233 this year, a decrease of 1,202, or 83.8%, compared to 1,435 in the previous year.

By business group, Sajo, which was newly designated as a disclosure-targeted business group last year, led the decline by reducing its existing 1,426 circular shareholding chains to 220. Taekwang and KG completely eliminated the two circular shareholding chains each had, thereby eradicating their circular ownership structures. In contrast, Hyundai Motor retained 4 chains and BS retained 1, unchanged from the previous year. Meanwhile, the number of mutual shareholdings between domestic affiliates increased from 9 to 14, but this was due to a newly designated group that held 6 mutual shareholdings. For existing groups, the number decreased from 9 to 8.

Controlling Shareholder’s Stake at Only 3.5%... 1,047 Companies Subject to Private Interest Appropriation Regulations

Despite certain improvements in ownership structure, such as resolving circular shareholding and a decline in treasury stock ratios, the gap between the small stakes of controlling shareholder families and their overall group control remained substantial. The average internal shareholding ratio among the 89 business groups with controlling shareholders was 61.4%, a slight decrease from the previous year, but the average direct stake held by controlling shareholder families was merely 3.5%. With affiliate companies holding an average of 55.5%, the structure where a minority stake is used to mobilize affiliates for control remains prevalent.

The number of companies subject to regulations on private interest appropriation by controlling shareholder families increased by 89 year-on-year to 1,047, mainly due to the inclusion of new groups. This represents 31.8% of the 3,293 companies belonging to all business groups with controlling shareholders. There were 431 companies where the controlling shareholder family held more than a 20% stake, and among these, affiliates with more than a 50% stake in such companies numbered 616.

Additionally, 115 overseas affiliates belonging to 34 groups were making direct or indirect investments in 88 domestic affiliates. There were 16 overseas affiliates in 8 groups, including 7 under Hyosung, that were wholly owned (100% shareholding) by the controlling shareholder. As for treasury stock, amid strengthened shareholder scrutiny and regulatory reforms, the average proportion fell by 0.5 percentage points from the previous year to 1.9%. However, the ratio of treasury stock held by listed affiliates owned by controlling shareholder families remained high: SK at 24.6%, Taekwang Industrial at 24.4%, and Lotte Holdings at 23.6%.

The Fair Trade Commission announced plans to gradually disclose ownership and investment structures as well as internal transaction information, encouraging autonomous market monitoring based on improved ownership structure such as the reduction of circular shareholding chains. The Commission also stated that it would rigorously enforce the law in cases where unfair internal transactions or suspicions of private interest appropriation by controlling shareholder families are confirmed.

This content was produced with the assistance of AI translation services.