Orion’s bid to acquire the JoongAng Ilbo has brought Chairman Dam Chul-gon’s opaque management style under fire. While the founding family, serving as unregistered executives, reduces the board of directors to a rubber stamp and plunges into mergers and acquisitions (M&As) with an unclear synergy with their core business, the stock price remains stagnant. This is the so-called "Orion Discount," where financial performance and stock prices move in opposite directions.

According to the Data Analysis, Retrieval and Transfer System (DART) of the Financial Supervisory Service on the 20th, Orion’s operating profit surged by 49.7% over the past five years (2021–2025), but its stock price rose by a mere 2.1%. During the same period, the KOSPI index gained 41.5%. The price-to-earnings ratio (PER) actually fell from 15.9x to 10.9x. This stands in sharp contrast to Nongshim, whose operating profit jumped 73.3% while its stock price climbed 35.8%.

A 610B-Won Bet That Bypassed the Board

The reason the market weighs future uncertainty more heavily than stellar earnings lies in the owner-centric decision-making structure. In 2024, Orion’s board of directors approved an 18.2 billion-won capital increase for its Indian subsidiary, but was merely briefed on the 548.5 billion-won acquisition of LIG Chem Biosciences. In essence, the board was reduced to a bystander in a transaction accounting for 16.3% of the company's assets.

The recent bid to acquire the JoongAng Ilbo was no different. Estimated acquisition costs, including liabilities and guaranteed amounts, reach 610 billion won. Although this scale exceeds 10% of the group's total assets of 5.143 trillion won announced by the Fair Trade Commission last April, Orion jumped into the acquisition battle without a resolution from the board of directors. Ultimately, Orion suffered a defeat. Six parties participated in the main bidding closed the previous day, and a consortium led by Daou Kiwoom Group, with CJ Group and Shinsegae participating, was selected as the preferred bidder.

Notably, while pouring effort into M&As, facility investments to boost core business competitiveness took a back seat. Orion’s cumulative facility investments over the past five years stood at 676.7 billion won, equivalent to only 28% of its cumulative operating profit. This is the lowest among seven major food companies. Over the same period, Ottogi reinvested 708.1 billion won of its 1.0065 trillion-won operating profit into facilities, bringing this ratio to 70%. Furthermore, Orion’s facility investment last year (146.3 billion won) dropped by 0.8% compared to five years ago.

No Accountability, Only Stockpiled Cash

Above all, critics point out that a structure of accountability for management performance is nowhere to be seen. Both Chairman Tam and Vice Chairman Lee Hwa-kyung are unregistered executives. Among seven major food companies, Orion and CJ CheilJedang are the only ones managed by group chairs acting as unregistered executives. Registered directors leave their real names on board voting records, whereas unregistered executives have no such obligation. This contrasts sharply with Lotte Chairman Shin Dong-bin, who sits as an internal director at Lotte Wellfood, and Ottogi Chairman Ham Young-jun and Nongshim Chairman Shin Dong-won, who step to the forefront as chief executive officers.

Shareholder returns have also been lukewarm. Out of a cumulative net profit of 1.934 trillion-won on a consolidated basis over five years, Orion distributed only 353.8 billion won in dividends. The cumulative cash dividend payout ratio stood at 18.3%, the lowest among the seven companies, including Pulmuone (76.9%), CJ CheilJedang (38.8%), and Lotte Wellfood (37.3%). Cash left undistributed and piled up reached 1.5802 trillion won, double that of Nongshim. Although the dividend payout ratio was pushed up to 36.2% last year, the total dividend amount (138.4 billion won) accounted for a mere 10.6% of the 1.3025 trillion-won net cash.

Activist funds have also stepped up pressure. Flashlight Capital Partners stated, "Despite holding 2.1 trillion won in net cash and financial assets, Orion’s dividend yield remains at around 2.8%," adding, "Chairman Tam must choose between registering as a director for responsible management or serving without remuneration."

[ⓒ Global Economic Times. 무단전재-재배포 금지]