[Asia Economy Reporter Seulgina Jo] "We will enhance corporate value." Park Jung-ho, CEO of SK Telecom, who is up for reappointment, is tightening the reins on responsible management by granting stock options to executives for the third consecutive year. Earlier this year, Park expressed confidence in the company's performance by saying, "You can buy stocks this year," and he has now conveyed his determination to focus on raising mid- to long-term corporate value during the second management term that will continue for the next three years. The scale of stock options and the number of recipients have also been significantly increased.
◆ Stock options for executives for three consecutive years... Accelerating responsible management= According to SK Telecom on the 28th, the regular shareholders' meeting to be held at the T Tower in Euljiro, Seoul, on the 26th of next month will include the agenda for CEO Park's reappointment as well as the granting of stock options as major items.
SK Telecom, which first granted stock options to key executives among telecommunications companies in 2018, has decided to continue this practice for three consecutive years. This is interpreted as a measure to strengthen responsible management aimed at increasing mid- to long-term corporate value. Stock options are a system that grants employees the right to purchase a certain number of company shares at a predetermined price, so as the stock price rises due to performance, the executives' capital gains from selling also increase. This move also reflects the policy of SK Group Chairman Chey Tae-won to "strengthen responsible management by each affiliate."
CEO Park, whose reappointment is almost certain, will receive a total of 111,106 stock options this year. This is the first time in three years since his inauguration in 2017. Among registered executives, besides CEO Park, Yoo Sang-young, head of the MNO Business Division (2,353 shares), has been named for three consecutive years. Among unregistered executives, eight key executives who play a role in maximizing corporate value will be granted a total of 14,184 stock options based on performance. They include Kang Jong-ryeol, head of the ICT Infrastructure Center; Ha Hyung-il, head of Corporate Center 2; Kim Yoon, head of the AIX Center; Heo Seok-jun, head of the PP Group; Yoon Poong-young, head of Corporate Center 1; Ha Sung-ho, head of the CR Center; Jo Dong-hwan, head of the IT Innovation Center; and Lee Hyun-ah, head of the AI Service Unit.
Compared to the past two years when stock options were granted to 3 to 5 executives annually, this year’s scale has been greatly expanded. An SK Telecom official explained, "We aimed to promote the long-term enhancement of corporate value by granting stock options to key executives who play an important role in maximizing corporate value."
◆ Strong determination and confidence in corporate value= Internally, this also appears to reflect a sense of crisis over the recently plummeting stock price. SK Telecom’s stock price fell from the 260,000 KRW range per share at the end of May last year, right after the commercialization of 5G, to the 210,000 KRW range as of the 24th. Considering the exercise period from 2023 to 2027 and the strike price, this move seems to embody an ambition to reach the 300,000 KRW range per share. It aims to break free from the current situation where the stock price has remained in the 200,000 KRW range since the stock split.
CEO Park has also shown confidence. On the 14th and 17th, he consecutively acquired 1,000 and 500 shares of company stock. Including the 1,000 shares purchased in March 2017, the total amounts to about 600 million KRW. An industry insider said, "Not only CEO Park but also executives of major internal business divisions are voluntarily purchasing company shares," describing it as "confidence in corporate value."
This confidence is also evident in Park’s statements at official events this year. At the beginning of the year, he asserted to employees, "You can buy stocks," and in meetings with reporters, he said, "Since I took office, the performance and structure of SK Telecom’s subsidiaries have turned positive."
This year, SK Telecom plans to list subsidiaries such as SK Broadband. The wireless business division, which was hit hard by the 5G price war last year, is expected to turn around this year thanks to the full-scale popularization of 5G. Last year’s sales reached a record high of 17.7437 trillion KRW, and this year is expected to break that record again.
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