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'Suspected Intentional Delisting' Daedong Electronics: Staff Decreased While Salaries Skyrocketed in 'Suspicious Settlement'

[비즈한국] Daedong Electronics008110, a manufacturer of electronic components, is mired in controversy as it faces the risk of delisting despite being evaluated as a sound company. As minority shareholders have recently taken to the streets to protest against 'intentional delisting,' it has been confirmed that the company significantly increased its salary expenditures abnormally immediately after the delisting decision. The strange phenomenon of total payroll costs surging while staff numbers were drastically reduced suggests that management may have lined their pockets with the company's cash assets under the guise of bonuses.

According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART), Daedong Electronics spent 1.24793 billion won in salaries from July to September last year. Considering the estimated salary expenditure of about 277 million won in the second quarter (April-June), the labor cost spending increased 4.5 times in just three months. Compared to the same period of the previous year (263.49 million won), the increase is 373%.

Did they hire a large number of employees? On the contrary, the number of employees at Daedong Electronics decreased by 36.8% in one year, from 68 as of September 30, 2024, to 43 as of September 30, 2025. With fewer personnel but higher salary payments, questions are inevitably raised about the reasoning behind this.

The answer lay in executive bonuses. An analysis of the compensation paid by Daedong Electronics to its key management reveals that bonuses paid to key executives between April and September 2025 totaled 1 billion won. This is an increase of approximately 190% compared to the same period the previous year (345 million won). Most of the increased salary expenditure flowed directly to the management.

Kim Hong-kwon, Managing Director (Partner) at Accounting Firm Beyul, pointed out, “Companies facing delisting usually either make agonizing self-rescue efforts or show extreme moral hazard leading toward catastrophe. The strange phenomenon of skyrocketing labor costs despite a drastic reduction in staff is highly likely to be a sign of the latter,” adding, “It strongly suggests the possibility that high salaries or bonuses were paid to key management or related parties.”

The timing of the salary surge is also sensitive. Daedong Electronics was notified of the KOSPI (Korea Composite Stock Price Index) delisting decision on July 31, 2025, following a review and resolution by the Korea Exchange’s Corporate Review Committee. While the company filed for an injunction in court on August 4, immediately after the delisting decision, to prevent it, it simultaneously engaged in the hypocritical act of securing high-value bonuses. This is why critics argue that the lawsuit, intended to reassure shareholders, was merely a tactic to buy time for the management to line their own pockets.

The damage is borne entirely by the minority shareholders. Trading of Daedong Electronics stock has been suspended since June 18, 2024, when the auditor submitted an audit report with a 'qualified' opinion for two consecutive years, citing limitations in the scope of the audit. While shareholders' assets were frozen and the company was driven to the brink of delisting, the management held a feast.

On the 5th, in front of the Daedong Electronics headquarters, the cries of minority shareholders filled the air. Shareholders raised suspicions that the largest shareholder might have planned an intentional delisting, given that Daedong Electronics has assets worth 300 billion won.

As of September 30 last year, Daedong Electronics held total assets of 275.3 billion won, including 133.5 billion won in current assets. Conversely, total liabilities are 22.1 billion won, with a debt ratio of only about 8%, marking it as a sound company with almost no debt. Furthermore, with earned surplus reaching 170.7 billion won, it is difficult to see how the company is in financial distress. It is a situation where minority shareholders cannot help but raise suspicions about the delisting.

Looking at the current shareholder composition of Daedong Electronics, excluding the 7% held by other shareholders (including 6.23% by minority shareholders), 93% is held by the family of founder Chairman Kang Jeong-myung. Kang's son, Kang Jeong-woo, is the largest shareholder, with the Singapore-based corporation Daimei Shoji holding 29.89%, Kang holding 28.13%, and Chairman Kang holding 1.62%, while the remaining 33.36% consists of treasury shares.

The entity identified in the audit report as the cause for the limitation in the scope of the audit is Zegna Daidong Ltd., a related company based in Hong Kong. The inability to verify the accounting status of Zegna Daidong is the reason for the 'qualified' opinion. According to materials provided by the exchange to Daedong Electronics shareholders, Zegna Daidong's shareholders consist of Daedong Electronics (36.96%), Daimei Shoji (38.47%), Sony Global Manufacturing & Operations Corporation (19.3%), and other shareholders (5.26%). With Daedong Electronics and Daimei Shoji holding 75.43%, it is effectively under the absolute control of the owner's family. For this reason, minority shareholders suspect that the company intentionally withheld data to induce a qualified audit opinion in order to force a delisting.

A representative for Daedong Electronics' minority shareholders, identified as Mr. A, stated, “It has been revealed that Zegna Daidong is also a company owned by the owner's family, yet the company had been explaining that it received a qualified opinion because it could not receive materials from Zegna Daidong,” and added, “If the company is delisted and liquidation trading proceeds, the stock price will likely fall by more than 90%, which would leave shareholders holding nothing but worthless paper.”

Shareholders also criticized the passive attitude of financial authorities. They argue that authorities are tied up in formal accounting regulations and fail to examine the actual corporate value and the allegations of breach of trust by major shareholders, effectively granting absolution to major shareholders who seek to privatize a sound company at a bargain price. Lee Sang-mok, CEO of Conduit, which operates the online minority shareholder platform 'Act,' also emphasized, “The government is accelerating the exit of zombie companies to protect investors and boost value, but the case of Daedong Electronics shows the blind spots of such policy. Companies like Daedong Electronics, which are sound but act like zombie companies to use the liquidation trading period to wipe out minority shareholders at a bargain price, must be strictly punished.”

An official from Daedong Electronics said, “We have no particular comment,” regarding the issues raised by the minority shareholders.