Stock Plunge Immediately After Receipt... The 'Faded' SK Innovation Stock Grant

SK Innovation Grants Stock Awards Worth 160 Million KRW to 5 Outside Directors on 28th Last Month
Battery Business Spin-off Plan, Sharp Stock Price Drop
Stock Grant Share Payment Timing Subject to Earned Income Tax...High Tax Rate Reduces Compensation Amount

[Asia Economy Reporter Ji Yeon-jin] Since SK Innovation announced its plan to split its battery business, its corporate value has plummeted, diminishing the significance of the 'Stock Grant' introduced for the first time this year. A stock grant is a stock compensation method where the company distributes shares it holds to employees free of charge. SK Innovation implemented a system this year to grant stock grants to all outside directors to strengthen responsible management by the board of directors.

According to the Financial Supervisory Service's electronic disclosure on the 2nd, SK Innovation deposited 570 treasury shares into the accounts of five outside directors on the 28th of last month. The stock compensation is worth a total of 161.88 million KRW at 284,000 KRW per share. The shares were allocated as follows: Kim Jong-hoon 150 shares, Kim Jun and Choi Eun-seok 110 shares each, and Kim Jung-kwan and Heo Yoon-kyung 100 shares each.

SK Innovation announced its mid-to-long-term strategic direction and investment plans at an investor relations (IR) meeting the day before, stating that it is considering splitting the battery business and listing it on NASDAQ. The market expressed concerns that the corporate value of SK Innovation would decline due to the battery business spin-off, and the stock price fell 8.8% compared to the previous day’s closing price.

The stock price plunged just two days after the five outside directors received the stock grants. The financial investment industry expects short-term weakness in corporate value to be inevitable. In the case of LG Chem, its stock price also dropped significantly immediately after announcing the battery business split in September last year. Kang Dong-jin, a researcher at Hyundai Motor Securities, said on the day, "If a physical division is decided in the future, the discount could expand up to 50%, reflecting the competitor’s corporate evaluation," lowering the target price from the current 310,000 KRW to 290,000 KRW.

Unlike stock options, which are taxed on capital gains at the time of exercise, stock grants are subject to earned income tax at the time of stock issuance. Therefore, if the stock price falls, the compensation amount can be impaired. Earned income tax is subject to comprehensive taxation with a progressive tax rate. If a high tax rate is applied and a large amount of tax is paid, the compensation amount can significantly decrease if the stock price drops sharply when selling.

Meanwhile, SK Innovation’s outside directors cannot transfer or dispose of the shares received through stock grants to others during their director terms.

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