'No Dividend Distribution' Board Decision as Intended... SK Inno Approves 2021 In-Kind Dividend of Around 2,500 KRW per Share

SK Inno Establishes Medium-Term Dividend Policy

"Aiming for Dividend Payout Ratio of '30% or More' Over 3 Years"
"No Specific Method for Dividends Such as Stock or Cash"

SK Group headquarters building in Seorin-dong, Jongno-gu, Seoul, where SK Innovation is located. (Photo by SK Inno)

[Asia Economy Reporter Moon Chaeseok] SK Innovation has decided to proceed with a year-end dividend in kind for last year. It announced that it decided to pay dividends just 11 days after the board of directors rejected the proposal to not pay dividends as originally planned.

On the 7th, SK Innovation held an extraordinary board meeting and resolved to pay a year-end dividend in kind for 2021. On the 27th of last month, SK Innovation's board had rejected the no-dividend proposal, citing reasons such as enhancing shareholder value through shareholder returns and securing shareholder trust. An SK Innovation official said, "Reflecting the board's decision and opinions, we re-examined the 2021 dividend plan from scratch and resubmitted the dividend in kind proposal to the board for approval."

Considering the company's large-scale investments over the next three years, SK Innovation decided to conduct the 2021 year-end dividend as a dividend in kind using treasury shares. Accordingly, SK Innovation shareholders will receive 0.011 shares of treasury common stock per one common share, and for preferred shares, 0.011 shares of treasury stock plus 50 KRW per share as dividends. Based on the closing price of 228,000 KRW on the last business day before the board meeting, April 4th, the dividend per share is calculated as 2,508 KRW for common shares and 2,558 KRW for preferred shares, with a payout ratio of about 69%. The dividends will be credited to shareholders' stock accounts within one month from the date of the general shareholders' meeting. After the dividend in kind, fractional shares will be paid in cash. The cash payment for fractional shares will be calculated based on the closing price on the day before the regular shareholders' meeting.

Previously, SK Innovation skipped shareholder dividends due to poor performance two years ago and spun off its battery and oil development businesses last year. The resulting stock price decline and other factors caused considerable shareholder backlash. In response, SK Innovation announced that it has established a mid-term dividend policy along with the cash dividend decision.

The mid-term dividend policy includes a target payout ratio of over 30% annually for the next three years. The policy reflects feedback from shareholders and stakeholders on the company's financial story. It also considers the payout ratios of other companies in the same industry, the demands of stakeholders, and the financial structure of a company planning large-scale investment expenditures. SK Innovation expects that this mid-term dividend policy will make it easier for shareholders and stakeholders to predict the company's future dividends. SK Innovation stated, "We will continue to communicate with the market to enhance trust with shareholders and stakeholders and reflect this in the establishment of shareholder return policies."

Last September, SK Innovation amended its articles of incorporation to allow shareholder profit distribution in cash, stock, or other assets, leading some industry insiders to speculate that profit distribution could be made through stock dividends rather than cash. Regarding this, SK Innovation said, "The method of dividend, whether in kind or cash, has not been specified."

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