South Korea’s major conglomerates are rapidly expanding the use of stock-based compensation for controlling shareholders, their relatives, and executives in lieu of cash. Samsung Electronics, in particular, drove the overall increase by signing a large volume of stock grant agreements for its executives.

According to the “2026 Disclosure-Obligated Business Group Shareholding Status” released by the Korea Fair Trade Commission (FTC) on the 3rd, 15 major conglomerates with controlling shareholders entered into a total of 585 new stock grant agreements last year for performance compensation and other purposes. That represents a 65.7% increase from 353 agreements a year earlier.

Samsung led with 317 agreements, accounting for 54% of the total. Samsung Electronics had signed zero stock grant agreements in 2024, but last year it converted executive incentives from cash to stock-based compensation, sharply increasing the number of agreements. The FTC noted that Samsung described the move as a measure to strengthen management accountability.

Following Samsung, SK signed 68 agreements, Hanwha 42, Doosan 26, and Amorepacific 22. HYBE, Krafton, Nexon, Naver, and Kakao were also among the business groups that utilized stock grant agreements.

Agreements targeting controlling shareholders and their relatives were confirmed at six groups, involving 11 individuals and 19 agreements in total. Doosan, Amorepacific, and Kyobo Life Insurance entered into agreements with their controlling shareholders, while Hanwha, Woongjin, and Eugene signed agreements with second-generation heirs.

Woongjin agreed to grant 2,213,520 common shares of Woongjin to Yoon Sae-bom, the second son of Chairman Yoon Seok-keum. The shares vest only if he remains employed for three years from the agreement date and receives a performance rating above a certain threshold.

Hanwha signed nine agreements targeting Chairman Kim Seung-youn’s three sons: Vice Chairman Kim Dong-kwan, President Kim Dong-won, and Vice President Kim Dong-seon. The underlying shares include Hanwha Corporation, Hanwha Life Insurance, Hanwha Solutions, and Hanwha Aerospace. Payment timing is set between four years and six months to ten years after the agreement date, with vesting contingent on continued employment and whether the company incurred losses.

Eugene Corporation agreed to grant 747,818 common shares to President Yoo Seok-hoon, a second-generation heir of the controlling family. Kyobo Life Insurance granted Chairman Shin Chang-jae performance-based compensation that allows for additional share grants or clawbacks. Amorepacific was found to have entered into two agreements with Chairman Suh Kyung-bae that were subsequently cancelled.

Kim Min-ah, head of the FTC’s Business Group Information Analysis Team, said, “Stock grant agreements function as performance compensation for executives, so they do not carry significant negative implications in and of themselves,” adding, “We are carefully monitoring for any future concentration of these agreements among controlling shareholder families or related parties.”

Ownership-Control Gap Persists

Apart from the expansion of stock compensation, the ownership and control structure of major conglomerates continues to show a wide divergence. The internal ownership ratio of 89 business groups with controlling shareholders stood at 61.4%, down 1.0 percentage point from a year earlier. Internal ownership refers to the proportion of all issued shares of South Korean affiliates held by controlling shareholders, their relatives, affiliate companies, nonprofit entities, and executives.

The direct stake held by controlling shareholder families averaged just 3.5%. Affiliate companies held 55.5% of shares. Both figures declined slightly from the prior year, but the gap between the direct stake of controlling shareholder families and the overall internal ownership ratio reached 57.9 percentage points. The FTC assessed that the structure in which controlling shareholder families control entire groups with minimal equity stakes persists.

Among business groups, Iljin Global had the highest controlling shareholder stake at 51.4%, followed by Daemyung Chemical at 26.4%, Booyoung at 23.1%, Amorepacific at 17.5%, and DB at 16.8%. The average controlling shareholder stake across the 87 groups where the controlling shareholder held equity was 8.3%.

For second-generation heirs, Nexon had the highest stake at 65.1%. Hankook & Company Group followed at 19.6%, with Bando Holdings and Aekyung at 12.1% each.

Treasury share ratios also declined. The average treasury share ratio of companies belonging to business groups with controlling shareholders was 1.9%, down 0.5 percentage points from the prior year. This is attributed to strengthened regulation and market scrutiny following the Commercial Act amendment that requires treasury shares to be retired within one year of acquisition. Companies under HYBE and Toss held no treasury shares.

By business group, Mirae Asset had the highest treasury share ratio at 10.5%, followed by Kyobo Life Insurance at 8.5%, KCC at 7.5%, and Booyoung at 5.9%. Among affiliates in which controlling shareholder families held stakes, SK Corporation had the highest treasury share ratio at 24.6%, followed by Taekwang Industrial at 24.4% and Lotte Holdings at 23.6%.

Related-Party Transaction Targets Top 1,000 for First Time

The number of companies subject to regulations on related-party transactions benefiting controlling shareholder families totaled 1,047 across 88 business groups. That represents 31.8% of all 3,293 affiliate companies. The figure rose by 89 companies from a year earlier, surpassing 1,000 for the first time. The FTC explained that much of the increase stemmed from newly designated business groups entering the disclosure system.

Among the regulated companies, 431 were firms in which controlling shareholder families held stakes of 20% or more, while 616 were companies in which those firms held more than 50% equity.

Circular shareholding chains declined sharply. The number of circular shareholding chains among disclosure-obligated business groups fell by 1,202, from 1,435 last year to 233 this year. The reduction was largely driven by Sajo, which was newly included in the disclosure system last year and reduced its circular shareholding chains from 1,426 to 220. Taekwang and KG eliminated all of their existing circular shareholding chains. Hyundai Motor Group maintained four chains and BS maintained one, unchanged from the prior year.

The number of cross-shareholdings among South Korean affiliates increased from 9 to 14, but this was due to newly designated business groups that already held cross-shareholdings prior to designation. Cross-shareholdings among existing designated groups decreased from 9 to 8.

Overseas affiliates in which controlling shareholder families held stakes of 20% or more numbered 57 across 21 business groups. Of these, 37 companies were wholly owned (100%) by controlling shareholder families. By country, the United States hosted the most such overseas affiliates at 27, followed by Japan with 14 and Singapore with 8.

Notably, among overseas affiliates in which controlling shareholder families held stakes of 20% or more, 10 companies across five business groups directly or indirectly invested in South Korean affiliates. These included four under Lotte, three under OK Financial Group, and one each under Janggeum Merchant Marine, Kolon, and Bithumb.

Regarding the gap between direct stakes of controlling shareholder families and internal ownership ratios, Team Leader Kim said, “It means controlling shareholder families control entire groups with minimal equity stakes,” adding, “We view this gap negatively.” She emphasized the need to reduce indirect investment, circular shareholding, and other structures that strengthen control through roundabout means, and urged companies to improve their own ownership and governance structures.