Hanwha Group’s third-generation leadership succession has effectively entered its final stage. Vice Chairman Kim Dong-kwan has raised his effective stake in Hanwha Corp., the group’s de facto holding company, to 23.02%, securing the position of largest shareholder and surpassing Chairman Kim Seung-yeon. Additionally, restricted stock units (RSUs) accumulated by the third-generation heirs over several years are emerging as a critical variable in the upcoming governance restructuring.

According to industry sources on the 7th, Hanwha Corp., having completed its spin-off, is set to be relisted on the 25th. Hanwha Corp. separated its tech and lifestyle divisions into Hanwha Machinery & Service Holdings (Hanwha M&S), splitting into a surviving entity and a newly established company. The split ratio is 0.7563533 to 0.2436467, with existing shareholders receiving shares in both companies according to this ratio.

This corporate separation has significantly altered the shareholding structure of Chairman Kim Seung-yeon and his three sons in Hanwha Corp. According to disclosed stakes, Hanwha Energy is the largest shareholder with 23.55%, while Chairman Kim Seung-yeon holds 12.04%. Vice Chairman Kim Dong-kwan’s stake, including RSUs, has risen to 11.27%, with President Kim Dong-sun at 5.79% and Vice Chairman Kim Dong-won at 5.71%.

However, actual control differs substantially from the disclosed shareholding ratios. Hanwha Group operates a “rooftop-on-rooftop” structure where the owner family controls Hanwha Corp. through the unlisted entity Hanwha Energy. Vice Chairman Kim Dong-kwan is the largest shareholder of Hanwha Energy with a 50% stake, while Vice Chairman Kim Dong-won holds 20% and President Kim Dong-sun holds 10%. The remaining 20% is held by financial investors.

Factoring this in, Vice Chairman Kim Dong-kwan’s effective stake in Hanwha Corp. reaches 23.02%. This figure combines his proportional share of Hanwha Energy’s stake (11.775%, representing 50% of its 23.55% holding) with his personal stake of 11.27%. This substantially exceeds Chairman Kim Seung-yeon’s personal stake of 12.04%.

The pace of stake accumulation is striking compared to three years ago. At the beginning of 2023, Vice Chairman Kim Dong-kwan’s stake in Hanwha Corp. was just 4.44%. It subsequently rose to 4.91% after inheriting shares from his late mother, Seo Young-soon, and he steadily increased his holdings through share purchases. The decisive moment came last year when Chairman Kim Seung-yeon gifted half of his stake, or 11.32%, causing his son’s holding to jump into the double digits overnight.

Vice Chairman Kim Dong-kwan was promoted to senior vice chairman approximately four years after becoming vice chairman in August 2022, placing him in a position to lead the entire group. He is expected to spearhead key affiliates in defense, shipbuilding, and energy, including Hanwha Aerospace, Hanwha Ocean, and Hanwha Solutions.

The financial businesses overseen by Vice Chairman Kim Dong-won will remain within the surviving entity, Hanwha Corp. In contrast, the youngest son, President Kim Dong-sun, will oversee the newly established holding company Hanwha M&S, charting an independent course. Hanwha M&S comprises a tech division (Hanwha Vision, Hanwha Semitech, Hanwha Momentum, Hanwha Robotics, etc.) and a lifestyle division (Hanwha Galleria, Hanwha Hotels & Resorts, Ourhome, etc.), with a total of 57 affiliates including sub-subsidiaries. As of the end of 2025, its consolidated revenue was approximately 6 trillion won (approximately $4.2 billion), with total assets of 11.3 trillion won (approximately $8.0 billion).

Two major tasks remain for the complete finalization of the management succession: share swaps among the three brothers and the merger of Hanwha Energy and Hanwha Corp.

An industry insider noted, “There is a high likelihood that President Kim Dong-sun will swap his stakes in Hanwha Corp. and Hanwha M&S with Vice Chairman Kim Dong-kwan and Vice Chairman Kim Dong-won to strengthen control. The possibility of a Hanwha Energy listing also remains open.” In the long term, a scenario involving an initial public offering (IPO) of Hanwha Energy followed by a merger with Hanwha Corp. is considered the “final puzzle piece” of the management succession.

RSUs: The ‘Hidden Ammunition’ for Governance Restructuring

Amid this shareholding realignment, RSUs accumulated by the third-generation heirs over several years are emerging as a strategic variable. Hanwha Group was the first major South Korean conglomerate to introduce an RSU system in 2020. RSUs are a long-term performance-based compensation scheme where the company grants actual shares once certain tenure and performance conditions are met, designed to encourage long-term decision-making by management and enhance shareholder value.

Vice Chairman Kim Dong-kwan has received RSUs annually from Hanwha Solutions since 2020, Hanwha Corp. since 2021, and Hanwha Aerospace since 2022. His cumulative grants to date total 486,311 shares of Hanwha Solutions (0.2% of outstanding shares), 502,085 shares of Hanwha Corp. (0.9%), and 87,705 shares of Hanwha Aerospace (0.2%). Based on closing prices on the 5th of this month, these are valued at approximately 14.7 billion won (approximately $10.4 million) for Hanwha Solutions, 42.1 billion won (approximately $29.7 million) for Hanwha Corp., and 88.3 billion won (approximately $62.3 million) for Hanwha Aerospace. These RSUs vest 10 years from the grant date and will be sequentially reflected in total compensation starting from 2030.

Vice Chairman Kim Dong-won has received RSUs from Hanwha Life since 2020, accumulating 3,098,352 shares (0.4% of outstanding shares). This significantly exceeds his direct stake in Hanwha Life of 0.03% (300,000 shares). The scale of Vice Chairman Kim Dong-won’s RSU grants has trended upward each year, reaching 888,762 shares in 2026.

President Kim Dong-sun began receiving RSUs from Hanwha Corp. in 2024, accumulating 37,911 shares (0.1%). However, the vesting conditions are set at 4 years and 6 months to 7 years—shorter than his brothers’ 10-year terms—a measure seen as reflecting his relatively later start in receiving RSUs.

Based solely on current RSU volumes, all represent less than 1% of outstanding shares, making them difficult to view as a core succession tool. However, their significance changes when compared to existing direct holdings. Vice Chairman Kim Dong-kwan directly holds only 0.05% of Hanwha Solutions and 0.01% of Hanwha Aerospace, figures his RSU grants far exceed. Similarly, Vice Chairman Kim Dong-won’s RSU holdings (0.4%) are substantially larger than his direct stake in Hanwha Life (0.03%).

Should the Hanwha Energy IPO and subsequent merger with Hanwha Corp. materialize, the Hanwha Corp. shares accumulated over many years through RSUs could serve as a crucial casting vote, both as votes in favor of the merger and in share swap negotiations. The higher Hanwha Energy’s valuation and the lower Hanwha Corp.’s stock price remain, the more advantageous the position for the owner family in expanding control.

In President Kim Dong-sun’s case, his resignation in April from his role as head of the overseas business division at Hanwha Corp.’s construction unit eliminated the basis for receiving RSUs from Hanwha Corp. Instead, there is speculation he may receive RSUs from listed affiliates such as Hanwha M&S, which is scheduled for relisting on the 25th of this month, as well as Hanwha Vision and Hanwha Galleria.

‘Responsible Management’ Justification Faces Shareholder Trust Hurdle

Market sentiment regarding the tangible results of the “responsible management” touted by the RSU program is less than favorable. While Hanwha has described RSUs as a mechanism for generating long-term performance and enhancing shareholder value, critics argue that while executives benefit from RSUs, ordinary shareholders bear the pain of equity dilution and share price declines resulting from large-scale rights offerings.

Indeed, Hanwha Aerospace pursued a 3.6 trillion won (approximately $2.5 billion) rights offering in March last year, only to reduce it to 2.3 trillion won (approximately $1.6 billion) following correction demands from financial authorities. At the time, with operating cash flow exceeding 2 trillion won (approximately $1.4 billion), the pursuit of the largest-ever rights offering drew criticism as a “trick to reduce inheritance tax.”

Hanwha Solutions similarly planned a 2.4 trillion won (approximately $1.7 billion) rights offering this year but, after twice amending its securities registration statement due to public backlash, reduced the scale to the 1 trillion won (approximately $705.6 million) range. A significant portion of the trillion-won-level funds was allocated to debt repayment rather than business investment, drawing criticism that the burden was being shifted to existing shareholders. Hanwha Solutions continued RSU grants even while recording operating losses in the 300 billion won range in 2024 and last year.

At Hanwha Life, minority shareholders continue collective action over the suspension of dividends and inadequate shareholder return policies. Despite generating annual profits in the 1 trillion won range and holding treasury shares equivalent to 13.5% of outstanding shares, the company suspended dividends in 2024 and last year and has not introduced shareholder return measures such as share cancellations. The stock price has languished in the 2,000 to 4,000 won range for years, well below its par value of 5,000 won.

An industry insider commented, “Ultimately, the success or failure of the RSU system depends not on how many shares were granted, but on whether that compensation led to enhanced corporate and shareholder value. The third-generation heirs will need to address the challenges of performance, shareholder returns, and restoring trust.”