SMEs minister nominee exercises Naver stock options amid conflict-of-interest controversy
Han Seong-sook, nominee for minister of SMEs and startups, answers questions from reporters as she arrives at her parliamentary confirmation hearing preparation office in Yeongdeungpo District, Seoul, June 26. Yonhap
Han Seong-sook, the former Naver CEO who was recently nominated by President Lee Jae Myung to lead the Ministry of SMEs and Startups, has decided to exercise 60,000 of the 100,000 stock options she received from the company, in response to conflict-of-interest concerns, according to industry officials Friday.
She submitted a request to Naver to exercise 60,000 stock options she currently holds, with plans to dispose of them upon taking office. However, she reportedly gave up exercising the remaining 40,000 options.
The move is seen as a step to shield herself from a potential conflict-of-interest controversy.
Under the Public Service Ethics Act, high-ranking public officials who, along with related parties, hold stocks connected to their official duties exceeding 30 million won ($22,000) in total value must either sell the shares or place them in a blind trust.
It is a safeguard designed to prevent potential conflicts of interest from arising in the course of public service.
Stock options, however, are not considered realizable assets until exercised and are thus exempt from mandatory divestment requirements. There are no specific laws restricting public officials from holding stock options.
Even so, Han's choice to exercise the options is seen as a proactive measure to eliminate any potential conflict of interest in her future role as the SMEs minister. Given that the ministry oversees a wide range of support programs for not only small and medium-sized enterprises and self-employed businesses, but also startups and venture firms, there could be heightened scrutiny over any perceived ties with firms such as Naver.
The 60,000 stock options Han exercised include 20,000 shares granted in 2019 with an exercise price of 131,000 won per share, and 40,000 shares granted in 2020 at 186,000 won per share.
The shares, valued at about 10 billion won based on exercise prices, are scheduled to be deposited on Thursday.
She plans to sell all 60,000 shares upon taking office. Based on Thursday's closing price of 253,000 won, the shares are worth around 15.2 billion won. After deducting the exercise cost and taxes, estimated at 1.2 billion won, Han is expected to realize a capital gain of about 3.9 billion won.
Separately, she also plans to sell all 8,934 Naver shares she currently owns once appointed.
But she has opted not to exercise the 40,000 stock options granted in 2021, as the exercise price of 384,500 won per share is significantly higher than the current market price.
As a result, Han will not hold a single share of Naver stock after assuming the ministerial post.
Meanwhile, Han's mother also plans to sell her holdings of 575 Hyundai Motor shares, worth about 110 million won, and 2,589 Samsung Electronics shares, valued at around 150 million won.