LG Corp. "50 Billion KRW Treasury Stock to be Cancelled by 2026... Introduction of Interim Dividends"

Promotion of Expanded Shareholder Returns to Enhance Corporate Value

LG Corporation announced on the 22nd a value enhancement (value-up) plan centered on shareholder return policies to increase corporate value.

The main shareholder return policies included in LG Corporation's corporate value enhancement plan are ▲cancellation of all treasury shares ▲improvement of dividend policy ▲implementation of interim (semi-annual) dividends.

LG Corporation decided in May 2022 to acquire treasury shares worth 500 billion KRW by the end of this year and completed the early purchase by the end of June. As part of shareholder returns, it announced that all treasury shares will be canceled by 2026. The treasury shares planned for cancellation are 6,059,161 common shares. Treasury shares previously acquired as fractional shares (49,828 common shares and 10,421 preferred shares) will also be fully canceled, subject to approval at the 2025 regular shareholders' meeting.

Additionally, LG Corporation decided to raise its dividend policy, which has been implemented since 2022, from returning at least 50% of net income based on separate financial statements (excluding one-time non-recurring gains) to shareholders, to 60% starting next year, an increase of 10 percentage points. In 2022, LG Corporation expanded its shareholder return policy once by removing the phrase "limited to dividend income" from the dividend policy. The average dividend payout ratio from 2018 to 2023 was around 66%.

LG Group Headquarters, Yeouido, Seoul

Starting next year, LG Corporation will also introduce an interim dividend policy, paying dividends twice a year instead of once annually. The interim dividend amount will be confirmed first through approval of amendments to the articles of incorporation at the 2025 regular shareholders' meeting, and the record date will be set afterward, adopting a predictable dividend policy to enhance shareholder rights.

LG Corporation announced a goal to establish a virtuous cycle system that improves return on equity (ROE) through efficient resource allocation and expanded shareholder returns, aiming to achieve 8-10% ROE by 2027, more than double the current domestic holding company average ROE of 4%. ROE is a representative profitability indicator showing how much profit a company generates through its equity by dividing net income by total equity.

Specifically, LG plans to improve profitability by generating investment returns in the ABC (Artificial Intelligence, Bio, Cleantech) sectors identified as future growth engines. It also plans to revise the policy from "using recurring profits for dividends and investment funds and considering treasury share repurchases only when non-recurring profits occur" to "considering using some of the surplus cash after executing dividends and investment funds from recurring profits as a source for treasury share repurchases."

To maintain stable management control and improve profitability structure, LG Corporation has been acquiring shares of LG Electronics and LG Chem worth 200 billion KRW and 300 billion KRW respectively through on-market purchases since this month.