By Park Si-soo
The owners of the nation's 10 largest conglomerates possess an average 0.25 percent stake in their affiliates. Despite this, a complicated web of cross-shareholdings among affiliates has enabled them to take control of sprawling business empires, data showed Thursday.
Combined with the shares of their family members, ownership rises to 0.49 percent, said Chaebul.com, a Seoul-based corporate tracker that released the data.
The conglomerates subject to the analysis were Samsung, Hyundai Motor, SK, LG, Lotte, GS, Hyundai Heavy Industries (HHI), Hanjin, Hanwha and Doosan.
This bizarre governing structure has remained unchanged for many years despite plenty of criticism. Several attempts to change policy were thwarted due to the companies' opposition.
The issue has recently come to the fore again in the wake of the succession feud between the Lotte founder's two sons ― Shin Dong-joo and Dong-bin. The combined stakes of Lotte affiliates held by the founder Shin Kyuk-ho and his family members, including the two sons, amounts to only 1.94 percent.
Experts called this governing structure a major culprit undermining the company's managerial stability, leaving it vulnerable to external threats.
Samsung's recent dispute with U.S. hedge fund Elliot Associates was a byproduct of this structure, they said.
According to Chabul.com, the stock ownership of Park Yong-gon, chairman of Doosan Group, ranked at the bottom with virtually no stake, followed by Shin Kyuk-ho, chief of Lotte Group, with 0.05 percent. The combined stakes of Lotte affiliates held by the Shin family, including the founder's daughter and two sons, amounts to 1.94 percent.
LG Group Chairman Koo Bon-moo ranked second from the bottom with 0.07 percent. SK Group Chairman Chey Tae-won has placed the nation's third biggest conglomerate under his control despite holding a 0.51 percent stake, while HHI's biggest shareholder Chung Mong-joon, who opened his bid for FIFA's top job, has controlled the shipbuilder with a 0.07 percent stake.
Samsung Group Chairman Lee Kun-hee has the highest stock ownership ratio with 2.24 percent. The nation's biggest conglomerate has more than 80 affiliates, with 24 of them listed on the Seoul bourse. Together with stakes held by heir-apparent Lee Jae-yong and his two sisters, the Lee family has 5.16 percent of total, Chaebul.com said.
Hyundai Motor Chairman Chung Mong-koo has the second highest ratio with 1.89 percent, with the figure rising to 3.6 percent when shares held by his son and other family members are combined.
Hanjin Group Chairman Cho Yang-ho has 1.78 percent. GS Group Chairman Huh Chang-soo fell a little behind with 1.25 percent, while Hanwha Group Chairman Kim Seung-youn has 1.12 percent.
Meanwhile, the government and the ruling Saenuri Party have joined forces to revise competition rules to enhance fairness with the governing structure of family-controlled conglomerates.
The Fair Trade Commission and the Financial Supervisory Service have asked Lotte to render a clear picture of its governance structure. The regulators will then determine how best to deal with the problems concerning the conglomerate.
The owners of the nation's 10 largest conglomerates possess an average 0.25 percent stake in their affiliates. Despite this, a complicated web of cross-shareholdings among affiliates has enabled them to take control of sprawling business empires, data showed Thursday.
Combined with the shares of their family members, ownership rises to 0.49 percent, said Chaebul.com, a Seoul-based corporate tracker that released the data.
The conglomerates subject to the analysis were Samsung, Hyundai Motor, SK, LG, Lotte, GS, Hyundai Heavy Industries (HHI), Hanjin, Hanwha and Doosan.
This bizarre governing structure has remained unchanged for many years despite plenty of criticism. Several attempts to change policy were thwarted due to the companies' opposition.
The issue has recently come to the fore again in the wake of the succession feud between the Lotte founder's two sons ― Shin Dong-joo and Dong-bin. The combined stakes of Lotte affiliates held by the founder Shin Kyuk-ho and his family members, including the two sons, amounts to only 1.94 percent.
Experts called this governing structure a major culprit undermining the company's managerial stability, leaving it vulnerable to external threats.
Samsung's recent dispute with U.S. hedge fund Elliot Associates was a byproduct of this structure, they said.
According to Chabul.com, the stock ownership of Park Yong-gon, chairman of Doosan Group, ranked at the bottom with virtually no stake, followed by Shin Kyuk-ho, chief of Lotte Group, with 0.05 percent. The combined stakes of Lotte affiliates held by the Shin family, including the founder's daughter and two sons, amounts to 1.94 percent.
LG Group Chairman Koo Bon-moo ranked second from the bottom with 0.07 percent. SK Group Chairman Chey Tae-won has placed the nation's third biggest conglomerate under his control despite holding a 0.51 percent stake, while HHI's biggest shareholder Chung Mong-joon, who opened his bid for FIFA's top job, has controlled the shipbuilder with a 0.07 percent stake.
Samsung Group Chairman Lee Kun-hee has the highest stock ownership ratio with 2.24 percent. The nation's biggest conglomerate has more than 80 affiliates, with 24 of them listed on the Seoul bourse. Together with stakes held by heir-apparent Lee Jae-yong and his two sisters, the Lee family has 5.16 percent of total, Chaebul.com said.
Hyundai Motor Chairman Chung Mong-koo has the second highest ratio with 1.89 percent, with the figure rising to 3.6 percent when shares held by his son and other family members are combined.
Hanjin Group Chairman Cho Yang-ho has 1.78 percent. GS Group Chairman Huh Chang-soo fell a little behind with 1.25 percent, while Hanwha Group Chairman Kim Seung-youn has 1.12 percent.
Meanwhile, the government and the ruling Saenuri Party have joined forces to revise competition rules to enhance fairness with the governing structure of family-controlled conglomerates.
The Fair Trade Commission and the Financial Supervisory Service have asked Lotte to render a clear picture of its governance structure. The regulators will then determine how best to deal with the problems concerning the conglomerate.
