NHN headquarters

Many have raised voices claiming that NHN, the operator of the nation's largest portal Naver, should be more active in sharing its profits with its stakeholders because its dividend payout is too small compared to its size and income of the company.

According to the financial investment industry on the 12th, NHN had implemented a dividend payout policy, where its one third of its net profit is used for acquisition of its own stock and dividends. NHN's dividend payout policy focuses on acquiring its own stock. NHN has been purchasing its own stock 1 or 2 times a year since 2005 while offering little dividends.

For the last 11 years since listing on the domestic stock market in 2002, NHN has paid dividends four times. It started offering dividends in 2002 but it stopped offering for the next 7 years since 2003. Recently, it began offering again since 2011.

Last year, NHN's payout ratio was 5%, much less than the average dividend payout ratio of listed companies in the stock market which is 17.15%.

The payout ratio of NHN's competitor Daum Communications in 2012 was 19.2%. Only 12 companies out of KOSPI 200 stocks which offered dividends last year had a lower payout ratio than NHN.

The company's sum total of dividends was 55.9 billion won, only 1.96 percent of its net profit of 2.86 billion won.

Considering the fact that the payout ratio among domestic firms is less than half of other countries', NHN is paying the lowest level of dividends in the world.

A local stock exchange firm researcher said, "Although IT companies' payout ratio is relatively low due to its intensive R&D cost, NHN's payout ratio is small considering its profit and market position."

The researcher pointed out that NHN must raise its dividends as its growth has become slower than before, thus reducing opportunities for the stakeholders get a return on investment.

One of the reasons of NHN's inactive dividend policy comes from low share ratio of the largest shareholders including Lee Hae-Jin, chairman of the Board of Directors.

Bin Ki-Bum, professor at Myongji University, said, "Those companies with largest shareholders owning low share ratio tend to have a strong cash reserves instead of offering dividends. Because it's more helpful in securing management autonomy using pile of cash freely instead of profits gained from dividends."

The share ratio of the largest stakeholders including chairman Lee Hae-Jin, recorded 9.25 percent, which continuously decreased from 20.16 percent in 2002.