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Outside Directors, Stock Options, Stock Split… Why Unlisted Company DAS is Following 'Listed Company Grammar'

[비즈한국] Unusual movements have been captured at 'DAS,' an auto parts company previously embroiled in controversies over whether it was actually owned by former President Lee Myung-bak. Late last year, the company appointed three outside directors, introduced a stock option plan, and simultaneously split its shares at a ratio of 1-to-20. As DAS is an unlisted company, it is not required to appoint outside directors, and it is difficult for employees to sell shares even if they receive stock options. However, the situation changes if DAS proceeds with an Initial Public Offering (IPO). Listed companies are required to appoint outside directors, and it becomes much easier for employees holding stock options to dispose of their shares. Currently, there is no news in the securities industry regarding a potential IPO for DAS.

DAS appointed three outside directors last October. It is not unheard of for unlisted companies to appoint outside directors for the sake of ESG (Environmental, Social, and Governance) management, objective board decision-making, or strengthening management transparency. However, even though the ESG management craze has been in full swing since the late 2010s, DAS had not appointed any outside directors until now.

Around the same time, the company also introduced a stock option system. Stock options refer to the right of employees to purchase company shares at a predetermined price within a certain period. This is typically used by smaller startups. For employees, receiving stock options allows them to realize profits later when the company grows and its enterprise value increases.

While DAS is considered a solid mid-sized enterprise, it is difficult to expect explosive growth in the future. Although revenue increased by 2.37% from 1.787 trillion won in 2023 to 1.8294 trillion won in 2024, operating profit decreased by 40.56% from 85.8 billion won to 51 billion won during the same period. Even though revenue grew, profitability actually worsened.

Considering that DAS is an unlisted company, there is no guarantee that profits can be realized from stock options. Even if employees receive shares through stock options, they cannot realize profits if they cannot sell them. While unlisted stocks are traded actively these days, DAS shares have not been traded. DAS is 100% owned by Chairman Lee Sang-eun's family, the Ministry of Economy and Finance, and the Cheonggye Foundation. Since there are no minority shareholders, there has been no reason for the stock to be traded.

As it stands, receiving DAS stock carries little significance beyond the potential for receiving dividends. Last year, DAS paid out 886.2 million won in dividends. With a dividend of 3,000 won per share, the dividend payout ratio is around 2.76%.

However, the situation would change if DAS were to go public. Looking at its performance and company size, DAS is certainly in a position where an IPO is feasible. When DAS introduced the stock option system, it decided to split its shares at a 1-to-20 ratio. As a result, the total number of issued shares increased from 295,400 to 5,908,000.

Reviewing the Korea Exchange's requirements for KOSPI listing related to the number of shares, a company must satisfy one of the following: △General shareholder ownership ratio of 25% or more or at least 5 million shares △Public offering of 25% or more or at least 5 million shares △For a corporation with equity capital of 50 billion won or more, a public offering of at least 10% and the issuance of a certain number of shares based on equity capital △For companies offering shares simultaneously at home and abroad, a public offering of at least 10% or at least 1 million shares in the domestic market. By increasing its share count to over 5 million, DAS has at least satisfied some of the share-count requirements for an IPO.

Nevertheless, there is no specific news in the securities market regarding a DAS IPO. Bizhankook attempted to contact DAS via phone and email to get a comment, but was unable to reach them.