Kim Hyeong-yuk, chairman of Hanyang ENG, a semiconductor, display, and industrial plant engineering company, is moving in earnest to pass the business to his second son. By gifting a significant portion of equity to his second son, who has learned the ropes on the front lines of management over the past 10 years, the company's largest shareholder has changed.
As Chairman Kim Hyeong-yuk approaches the advanced age of 80, Hanyang ENG has faced ongoing controversy over succession. However, with this equity change, the debate over succession has been settled for now and management stability has come into view, giving the stock strong momentum. Reflecting market expectations, Hanyang ENG closed at an all-time high on the 28th.
Hanyang ENG said on the 28th that the largest shareholder had changed from founder Chairman Kim Hyeong-yuk to CEO Kim Yunsang. Although the total equity of the owner family remains the same at 46.53%, the company's single largest shareholder has changed from Chairman Kim Hyeong-yuk to his second son, CEO Kim Yunsang.
In the succession process, Chairman Kim pulled out the card of a "stock management trust" agreement instead of a direct gift. By entrusting 3,847,000 shares (21.36%) he holds to the trustee, CEO Kim, the practical voting rights and management control were transferred to the second son.
A stock management trust allows voting rights and beneficial interests to be separated and transferred without directly gifting the shares. At the same time, through a contract with the trustee, it blocks arbitrary disposal of equity, becoming a powerful means for the owner to defend management control.
Under this contract, CEO Kim Yunsang manages the shares and exercises voting rights, and the dividend income generated from the shares is structured to accrue to each of the two grandchildren. The company also said that, of the shares Chairman Kim gifted to CEO Kim, 360,000 shares will be transferred after establishing an in-house employee welfare fund.
A trust expert said, "If you use a trust instead of directly gifting shares, you can use the contract terms to separate voting rights and dividend rights and make varied use of the profits and rights derived from the shares," and noted, "They likely structured the trust contract considering multiple factors such as business succession and gifts."
Some analyze that Hanyang ENG's succession process became a complex equation because not only CEO Kim Yunsang but also the role of Chairman Kim's eldest son, CEO Kim Beom-sang, has to be considered.
Chairman Kim's eldest son, Beom-sang, who joined his father's company in 2007, is currently president of Hanyang ENG in charge of external relations. However, Beom-sang's internal standing is not high compared with his younger brother, Yunsang. While Yunsang, the company's co-CEO, joined the company in 2015, he built his career at Samsung Electronics following his father, and concurrently serves as CEO of the affiliate Hanyang Digitech; in contrast, Beom-sang is an unregistered president at Hanyang ENG and holds the position of executive vice president at Hanyang Digitech.
President Kim Beom-sang has a wide range of personal activities outside the family business. A graduate of the Korea National University of Arts, Beom-sang participates in the management of Hanyang ENG and Hanyang Digitech and also serves as CEO of the exhibition planning company Glint, which operates Piknic, a complex cultural space in Hoehyeon-dong, Seoul.
Although the equity gifting has not been fully completed, with CEO Kim Yunsang rising to the position of largest shareholder, some analyze that investors' attention will shift from the succession issue to the company's core business. Chairman Kim holds a remaining 7.68% equity stake, and Chairman Kim's spouse, Hong Ok-saeng, also holds a 10.57% stake.
Hanyang ENG, whose main business is semiconductor and display engineering, is responsible for the design, manufacturing, and construction of ultra-high-purity piping and chemical central supply systems (CCSS) used in the semiconductor manufacturing process at Samsung Electronics and SK hynix. After Chairman Kim Hyeong-yuk, a former Samsung Electronics executive, founded the company, orders from semiconductor companies had an overwhelming share, but the company expanded its engineering field to industrial plants, gas, and aerospace. Samsung C&T and gas companies in the United States and Europe are also clients.
In recent years, Hanyang ENG's annual sales have exceeded 1 trillion won, and operating profit has been around 85 billion won. The company's dividend payout ratio is about 14%, a high level.