[Data Pick] 10-Year Analysis of Executive Stock Options in Korean IPOs... Grant Timing Advanced by 4 Months, Exercise Prices Cut to 70% of Market Value

The timing of executive stock option grants in the South Korean IPO market has advanced by about four months over the past five years.

An analysis of 6,208 stock option grants by Korean listed companies that completed their IPOs over the 10-year period from 2016 to 2025, aligned within a ±24-month window of the IPO date, revealed that the median timing of pre-listing grants shifted from 9 months prior to listing in 2016-2020 to 13 months prior in 2021-2025. Over the same period, the proportion of grants made 1-2 years before listing (D-24M to D-13M) increased 1.5-fold from 34.9% to 52.1%, while the proportion of grants in the 6 months immediately preceding the listing (D-6M to D-1M) halved from 32.5% to 16.9%.

This indicates that the grant timing has moved from right before the listing to the early stages of IPO preparation. The common belief that "options are concentrated on executives right before going public" points in a different direction from the actual trend shown by the data.

Grants Occur Increasingly Earlier

When dividing the 10-year window of 2016-2025 into two 5-year periods for comparison, the specific timing of grants within the 24 months prior to listing has clearly been pushed forward.

(Source: PitchDeck, percentage by period when pre-listing grant volume for each timeframe is set at 100%)

Companies listed between 2016 and 2020 were most active in granting options during the 6 months immediately preceding their IPOs (32.5%). However, for companies listed between 2021 and 2025, that proportion shrank by half (16.9%). Instead, the proportion of grants issued 13 to 24 months before listing increased from 34.9% to 52.1%.

The change is even clearer when looking at the grant timing statistics. In 2016-2020, the median timing for pre-listing grants was 9 months before listing, with an average of 10.9 months. In 2021-2025, the median shifted to 13 months before listing, and the average to 13.2 months, advancing by about 4 months respectively.

Several interpretations of this shift are possible. First, as Korean venture capital investment rounds became more active, executive recruitment and incentive design may have been initiated much earlier than the IPO. Second, an increase in the proportion of sectors requiring long-term incubation before an IPO, such as startups and biotech, might have naturally shifted the timing of executive compensation. Third, as massive grants right before listing began drawing scrutiny from the market and regulatory authorities, a governance trend of intentionally dispersing and expediting the grant timing may have taken hold. The primary driver cannot be conclusively determined solely from the analyzed data.

Exercise Prices Converge with Market Value as Listing Approaches

An analysis of 4,481 cases where both the stock price at the time of grant and the exercise price were recorded revealed a clear trajectory: as the grant timing gets closer to the listing, the exercise price rapidly converges to the stock price at the time of the grant.

*Discount Rate = 1 - (Exercise Price / Stock Price at Grant Time). A positive number indicates the exercise price is lower than the stock price.

The median exercise price for options granted 19 to 24 months before listing was at 70% of the stock price at the time of the grant. However, as the listing approached, the discount rate rapidly decreased to 10% in the 6 months just prior to listing, and to 1.8% immediately after listing, essentially converging with the market price. Options granted 7 months or more after the listing are effectively granted at market exercise prices.

This pattern stems from the difference in valuation mechanisms between the unlisted and listed stages in South Korea. During the unlisted stage, there is significant discretion in determining fair value based on private valuations, and there is room to set the exercise price lower than the market value according to the previous funding round price or intrinsic value assessments. In contrast, after listing, market prices are formed daily, so the exercise price is almost automatically tied to the market price.

Out of the total 4,481 cases, 925 grants (20.6%) featured deeply discounted exercise prices of 50% or more. This means 1 in 5 cases had an exercise price set at less than half of the stock price at the time of the grant. There were also 363 grants (6.3% of the total exercise price data) with exercise prices of 1,000 KRW or less, which are essentially at par value, and 268 of these were pre-listing grants.
However, the 4,481 analyzable cases were limited to instances where both the exercise price and the stock price at the time of grant were captured in the data. The 1,727 cases missing either exercise price or stock price information were excluded from this discount rate analysis.

One-Time Massive Grants are Actually the Minority, Averaging 8 Grants

Out of the 772 companies that issued grants within the same 10-year window, only 104 companies (13.5%) granted options just once. The remaining 86.5% of companies made two or more grants within the analysis window alone.

The average number of grants per company was 8.0, and the median was 4. This implies that Korean listed companies operate an average of 4 or more grant rounds within the 4-year window surrounding their IPOs.

The top 10 companies by number of grants were Kakao (168), HPSP (111), Dreamtech (109), Eutilex (88), Lunit (76), Shift Up (70), Wanted Lab (69), HYBE (61), Kakao Pay (60), and Gencurix (59). Grant frequency is notably prominent in sectors where talent acquisition and retention are core to the business, such as IT platforms, biotech, gaming, and semiconductors. There are 27 companies that granted options 31 times or more, representing only 3.5% of the total, but this group accounts for a significant portion of the total number of grants.

The practice of "concentrating grants on executives all at once right before an IPO" is actually a minority pattern in the Korean IPO market. Distributed and repeated grants over several rounds have become established as the standard operating method for executive stock options in Korean IPOs.

Earlier, Deeper, and More Frequently

Putting these three findings together paints a picture of how executive stock options in Korean IPOs have changed over the past 10 years.

First, the grant timing has advanced. Over five years of listings, the median grant timing accelerated by 4 months, and the proportion of grants 1-2 years before listing increased 1.5-fold. Second, the depth of the exercise price varies with the proximity to the listing. Two years before listing, it stands at around 70% of the market value, but it converges to the market value as the listing approaches. Third, grants are made multiple times, rather than just once. With an average of 8 grants per company, a one-time concentrated grant is the minority.

These three patterns work in tandem. From an executive's perspective, an option granted 1 to 2 years before listing at an exercise price of 70% of the market value provides two sources of profit: the depth of the exercise price discount and the rise in the stock price at the time of exercise. This structure itself cannot be deemed abnormal. The design of executive incentives during the unlisted stage exists in all markets, and multiple dispersed grants are rational from a talent retention standpoint. What this analysis demonstrates is how the structure and timing distribution of executive stock options in Korean IPOs have changed over the past 10 years, not a judgment on the appropriateness of individual cases.

This analysis targeted companies that listed between 2016 and 2025 among those with recorded IPO dates in the Korea Exchange (KRX) listed company master database, mapped and extracted within a ±24-month window of their IPO dates. The limitations are noted as follows. First, the stock option data contains extreme values in the number of granted shares column for some companies, which are suspected to be unit errors. This article analyzed the data focusing on the distribution of counts, timing, and discount rates, and thus is unaffected by these errors, nor did it directly cite the absolute scale of the granted shares. Second, the discount rate analysis was limited to cases where both the stock price at the time of grant and the exercise price were captured (72.2% of the total). Third, this analysis only deals with the time-series patterns of the grant timing; linking this to the timing of exercise and sale, individual executive profits, and analyzing the position and tenure of the executives receiving grants require separate follow-up work. Fourth, for companies listed in 2024-2025, less than 24 months may have passed since their listing as of the analysis date (May 2026), meaning some post-listing grant data may be missing.