[Column] The Aftermath of Stock Option Speculation...

[Asia Economy Reporter Junho Hwang] The stock prices of companies that held stock option (stock purchase rights) bonanzas last year are plummeting. As investors were attracted by the appealing blueprints, executives exercised the stock options they had accumulated, and the stock prices subsequently plunged.

According to the Korea Exchange on the 16th, the stock price of Devsisters fell from 105,200 KRW per share at the end of last year to 51,600 KRW on the 13th of this month. After Co-CEO Jongheun Kim took home 48.8 billion KRW in salary alone last year, the stock price dropped by 50.95%. As the stock price rose more than 70% compared to the beginning of last year, executives took advantage of this gap to exercise stock options in November, earning 47.5 billion KRW. KakaoPay, whose CEO exercised stock options just one month after listing last year and took 33.7 billion KRW, also saw its stock price fall from 174,500 KRW at the end of last year to 86,000 KRW. HYBE’s Global CEO Seokjun Yoon and others earned about 40 billion KRW, but the stock price dropped from 349,000 KRW to 215,000 KRW over the past five months. While executives pocketed substantial profits, shareholders who invested in the companies’ futures were left in the lurch.

Their management skills worth hundreds of billions of KRW returned as dismal results in the first quarter of this year. Devsisters posted a consolidated operating profit of 9.4 billion KRW in Q1, down 60.23% year-on-year. KakaoPay recorded an operating loss of 1.1 billion KRW during the same period. HYBE achieved 37 billion KRW, down 49.84% from the previous quarter. Rather than demonstrating excellent management skills to confidently exercise stock options worth hundreds of billions, it appears they showed outstanding ability to increase personal assets while disregarding shareholders’ interests.

The shareholders who raised the stock prices enabling them to take hundreds of billions of KRW became like “dogs chasing chickens.” Going forward, investors must decide whether to choose “jangtu (long-term investment)” or “sonjeol (cutting losses).”

The new government is expected to introduce stock option incentives necessary to attract key talent to small and medium-sized enterprises. However, supplementary measures such as limiting the exercise period of stock options are needed. If a culture of “one-shot” mentality dominates the capital market, the arrows of small shareholders will inevitably be aimed at the government.