 |
|
Samsung Electronics Vice Chairman Lee Jae-yong
|
Family possession increases by over two percentage points without any overlays
The proportion of Samsung Electronics ownership by “special relations” of the ruling Lee family, including Vice Chairman Lee Jae-yong, rose by over two percentage points in the past three years or so without a penny of outlays thanks to the purchasing and retirement of treasury stock. On Dec. 4, Samsung Electronics completed the retirement of 899 million common shares and 161 million preferred shares from its treasury stock holdings. The total value amounts to over 20 trillion won (US$18 billion). Fully 14% of common stock issued by Samsung Electronics has evaporated over the course of two treasury stock retirements carried out since last year. The company previously purchased and retired treasury stock as a move to “return profits to shareholders” when it announced its three-year shareholder return policy in Oct. 2015. The effect of retirement is increased stock prices, as the value per share in terms of net profits and net assets increases as the total number of shares falls. Samsung Electronics also made a previous decision in Apr. 2017 to retire the full 40 trillion won (US$36 billion) worth of treasury stock it held at the time. The result was an increase in the ownership percentage for majority shareholder Lee Jae-yong and other members of the Lee family – without any change to the number of shares they own. While their total shares remain the same, their ownership percentage increases with the decline in the total number of shares issued. As of the third quarter of 2015, Samsung Group chairman Lee Kun-hee owned 3.38% of Samsung Electronics while Lee Jae-yong owned 0.57%; following the purchasing and retirement of treasury stock, their respective stakes rose to 3.88% and 0.65% as of Sept. 30, 2018. Ownership by special relations, including Lee Jae-yong and Samsung C&T, rose from 17.59% in 2015 to 19.76% in 2018. In addition to its treasury stock purchasing and retirement, Samsung Electronics also paid out over 12 trillion won (US$10.8 billion) in dividends between 2015 and 2017. It has further announced plans for 9.6 trillion won (US$8.6 billion) in dividends each year for the three years from 2018 to 2020. The payouts go to all shareholders, including the majority shareholder. Hi Investment & Securities analyst Lee Sang-heon called the decision “unfortunate, in that it would be useful socially for them to invest with those resources rather than retiring the treasury stock they hold.” “The effect of retiring the treasury stock was simply to increase the majority shareholder’s ownership percentage,” Lee observed. By Lee Wan, staff reporter Please direct comments or questions to [english@hani.co.kr]
