SK Telecom to Cancel 1.6M Treasury Shares, Retaining Small Pool for Executive Pay Under New Mandate

A new amendment to the Korean Commercial Act now requires companies to cancel their treasury shares within a set period, fundamentally changing how they are managed.

In response, SK Telecom will cancel about 1.6 million treasury shares and seek shareholder approval to retain a small portion solely for executive compensation.

This move aligns with a new 'cancel-first' trend set by peers like Samsung, and is expected to slightly boost shareholder value by increasing earnings per share (EPS).

SK Telecom is making a significant change to its capital policy by cancelling the majority of its treasury shares.

This decision is a direct response to a major legal shift. A recent amendment to Korea's Commercial Act, effective March 6, 2026, has completely changed the rules for treasury shares. Before, companies could hold onto these repurchased shares indefinitely, using them as a flexible strategic asset. Now, the law mandates that they must be cancelled within 18 months unless shareholders approve a specific exception, such as for employee compensation. This turns treasury shares from an asset into a time-sensitive liability that requires action.

So, what is SK Telecom's plan? First, the company will cancel approximately 1.6 million treasury shares, which represents about 0.75% of its total shares outstanding. Second, it is asking shareholders at its upcoming general meeting to approve retaining a much smaller pool of about 196,000 shares. This smaller amount is specifically earmarked for executive compensation, fitting neatly into the exception allowed by the new law.

This move isn't happening in a vacuum, though. The market context is just as important. In the first week after the law took effect, corporate giants like Samsung Electronics and SK Inc. announced their own massive treasury share cancellations. This set a powerful new precedent, creating a 'cancel, don't hold' expectation among investors. SK Telecom's action is therefore not just about legal compliance; it's also about aligning with the new best practice for corporate governance in Korea.

For shareholders, this is a positive development. By reducing the number of shares in circulation, the cancellation will mechanically increase Earnings Per Share (EPS) by about 0.75%, assuming profits remain stable. While a small boost, it's a clear and direct return of value to investors and reduces the administrative burden of managing a large treasury stock portfolio under the new regulations.

[Glossary]

Treasury Shares: Shares that a company has repurchased from the open market. Holding them reduces the number of outstanding shares.
Commercial Act: The primary law governing business activities and corporate structure in South Korea.
Earnings Per Share (EPS): A company's profit divided by the number of its outstanding shares, indicating profitability on a per-share basis.