SK Inc., the strategic investment arm of South Korea’s SK Group, announced on Aug. 30 that its board of directors has authorized a 200 billion won share repurchase, which accounts for over 1 percent of the company’s market capitalization, to enhance shareholders’ value.
SK Inc. plans to buy back its shares from the open market over a six-month period by entering a trustee agreement with a brokerage firm. Upon the expiration of the trust agreement, all repurchased shares will be canceled, with the approval from a separate board meeting, to bolster shareholders’ value.
The share buyback decision dovetails with the shareholders’ return policy, which SK Inc. pledged to implement at the general meeting of shareholders in March 2022. At the last shareholder’s meeting, the company announced that it would use the fund for extra dividend to buyback over 1 percent of market cap, every year through to 2025, instead of increasing dividend payments. SK Inc. has distributed over 30 percent of its recurring dividend income to shareholders since 2018 and used its investment income to finance special dividends, raising its dividend per share from 5,000 won in 2018 to 8,000 won in 2021.
SK Inc. is committed to maximizing the total shareholder return (TSR) by aligning its shareholders’ return policy with investment performances. Notably, it unveiled its vision for sustainable growth as an ESG-oriented value investor and has been accelerating its efforts to achieve it.
At the same time, the company has taken steps to empower the board to properly oversee and guide management and enhance shareholders’ rights. At the end of 2021, the firm overhauled its corporate governance charter to expand the scope of communication with shareholders and other stakeholders to include overall ESG management and required the shareholder communications director to report to the board.
“Despite the market uncertainty, SK Inc. has been sustaining growth momentum with a focus on four core businesses. Against this backdrop, SK Inc. has decided to repurchase its own shares to ensure that investment returns will translate into greater shareholders’ value” said Lee Sung-hyung, CFO of SK Inc. “By implementing shareholder-friendly policies over the medium and long-term, SK Inc. will solidify its position as a trusted leader in ESG.”