Shareholder Returns: Why Nexon Earns in Korea and Distributes in Japan

On August 14, 2026, Nexon’s stock price on the Tokyo Stock Exchange jumped by the 20% daily limit. The source of funds for this shareholder return was dividends sent by Nexon Korea, yet Nexon Games, the group’s only domestic listed company, has never paid a dividend since its inception. The difference isn’t due to nationality, but rather where the decision-making power to distribute profits lies.

Date: 2026-09-01 · Last Checked: 2026-10-01 · Figures based on reports and disclosures as of August 2026

The announcement was for a special dividend of 415 yen per share. Adding the existing regular dividend of 60 yen, the annual dividend per share reached 475 yen, representing a dividend yield of 19% based on the pre-announcement price of 2,520 yen. The total special dividend amounted to approximately 324 billion yen, nearly 3 trillion KRW. The stock closed at 3,022 yen that day.

When I first saw these numbers, my initial thought was, “It’s because it’s a Japanese company.” Nexon’s headquarters is listed in Tokyo, and there is nothing strange about returning money to Japanese shareholders. However, if you trace the money back to its source, that explanation quickly loses ground.

How Nexon Korea’s Dividends Become Tokyo’s Shareholder Returns

Nexon Korea is a non-listed subsidiary 100% owned by the Tokyo-listed company, Nexon. Profits generated by Nexon Korea are sent to the Tokyo headquarters as dividends, and the headquarters uses those funds to pay its own shareholders.

That scale has grown rapidly in recent years. According to Dealsite data, the dividends paid by Nexon Korea to its parent company were 343.7 billion KRW in 2022, 768 billion KRW in 2023, and 953.6 billion KRW in 2024. In 2025, the total reached 1.8525 trillion KRW—a 94.3% increase from the previous year—combining 682.5 billion KRW in March and 1.17 trillion KRW in September. This year, even larger sums moved at once. Prior to the special dividend announcement, Nexon Korea issued a 3.57 trillion KRW interim dividend to the headquarters.

The money arriving in Tokyo moves further up. The largest shareholder of Nexon’s headquarters is NXC, a holding company with a 46.32% stake, and it is estimated that approximately 1.34 trillion KRW went directly to NXC from this special dividend. NXC is the company controlled by the family of the late founder, Kim Jung-ju.

Why has Nexon Games never provided shareholder returns?

Within the Nexon Group, the only company listed on the Korean stock market is the KOSDAQ-listed Nexon Games. This company has never paid a dividend since its founding, nor has it announced any plans for share buybacks or cancellations.

There is a point that should be acknowledged fairly: Nexon Games turned into a deficit in 2025. It is unreasonable to demand dividends from a company operating at a loss.

The problem lies not in the fact that Nexon Games doesn’t pay dividends, but in the fact that the Korean entity that earns the most for the group is not listed. The Nexon stock that domestic retail investors can buy is not where the group’s profits aggregate.

Here is a comparison of the shareholder return structures of the three Nexon Group companies.

Category	Nexon (Tokyo Listed)	Nexon Korea (Non-listed)	Nexon Games (KOSDAQ Listed)
Shareholders	NXC 46.32% + Japan/Overseas Investors	Nexon HQ 100%	Nexon affiliates + Domestic retail shareholders
Dividend Decision-maker	Board of directors facing market shareholders	Effectively the parent company only	Board under affiliate control
Disclosed Return Policy	33% or more of previous year’s operating profit	None (remitted to parent company)	None
Recent Dividends	475 yen per share in 2026 (incl. special)	1.8525 trillion KRW in 2025	0 KRW since inception

Where does the power to determine shareholder returns reside?

Whether to pay dividends is ultimately decided by a company’s board of directors, and the board is conscious of shareholders who can hold them accountable.

The Nexon story is a question of at which level this oversight is applied.

Nexon Korea’s only shareholder is the Tokyo headquarters. Since there are no retail shareholders to argue for higher dividends, the money moves up to the parent company whenever and in whatever amount they desire.

The situation is different for the Tokyo headquarters.

There are investors who bought shares in the market, and since 2024, the company has officially pledged to return 33% or more of the previous year’s operating profit to shareholders. Annual dividends also doubled from 22.5 yen per share in 2024 to 45 yen in 2025.

What is noteworthy here is the interest of the largest shareholder.

In a listed company, the cleanest way for a controlling shareholder to extract cash is through dividends, which are paid equally to all shareholders based on their stake. For NXC to receive 1.34 trillion KRW, it must pay the same ratio to other shareholders. At the Tokyo level, the interests of the controlling shareholder and retail shareholders are aligned.

At the domestic listed level, it is the opposite. If profits are accumulated in Nexon Games and paid out as dividends, the share leaks to retail shareholders outside the group. If the same money is sent from the non-listed Nexon Korea to Tokyo, nothing leaks. This is why listing location is more important than nationality.

While this is a rational choice for the group as a whole, it creates an illusion for domestic investors that Nexon is a company that skimps on shareholder returns.

The atmosphere in the Japanese market also encouraged this trend.

Since 2023, the Tokyo Stock Exchange has required companies with a price-to-book ratio (PBR) below 1x to submit improvement plans, and the total shareholder return ratio for Japanese companies rose from an average of 55% in FY2019-2023 to 67% in FY2024. Nexon’s decision emerged from this market environment.

How do the forces compelling shareholder returns differ between the US and Korea?

The principle that management must manage company funds for the benefit of shareholders—fiduciary duty—exists in every country. What differs are the mechanisms that actually enforce that principle.

The US has multiple layers of such mechanisms. Executive compensation is tied to stock price, activist funds demand higher dividends while vying for board seats, and Delaware courts actively handle lawsuits regarding breaches of fiduciary duty. Management that simply hoards cash can lose their positions through shareholder votes.

Korea is in the process of building these mechanisms late.

Following the 2016 Stewardship Code, the 2020 separation of audit committee elections and the 3% cap on voting rights for largest shareholders, and the 2024 Value-up Program, three amendments to the Commercial Act were implemented starting in 2025, expanding the scope of directors’ fiduciary duty to include shareholders, not just the company.

While the law is moving toward the US model, precedents of winning lawsuits based on these laws have yet to be established.

Will mandatory treasury stock cancellation change Korean shareholder returns?

Alongside dividends, the other pillar of shareholder returns is treasury stock.

When a company buys back and cancels its own shares, the number of circulating shares decreases, increasing the value per share. The problem is that it has been common in Korea to hoard bought-back shares without canceling them.

Hoarded treasury shares have no voting rights, but their voting rights are revived the moment they are transferred to friendly parties. Effectively, shares bought with shareholder money could be used as a means to defend management control.

The 3rd Commercial Act Amendment passed by the National Assembly on February 25, 2026, narrowed this path. If a company acquires treasury shares, it must, in principle, cancel them within one year, and exceptions like employee compensation are only permitted within an approved processing plan. Violations are subject to fines of up to 50 million KRW.

However, the cancellation mandate is a rule on how to handle treasury shares that have already been bought.

It does not directly affect companies like Nexon Games that do not buy them in the first place, or groups where profits are concentrated in non-listed subsidiaries.

Why is the Korean shareholder return ratio still low?

The gap is clear when looking at the numbers.

According to securities industry data cited by Money Today, the 10-year average shareholder return ratio was 92.5% in the US and 68% in developed countries excluding the US, while Korea stood at 31.9%, similar to China (31.5%).

The Nexon case illustrates one of the causes of these figures.

It is common in Korea for the governance structure to be designed such that the company where profits accumulate and the company that retail investors can buy are different entities.

Demanding higher dividend payout ratios alone will not resolve this misalignment.

The dividend received by Nexon Games shareholders is still 0 KRW, while the interim dividend Nexon Korea sent to Tokyo this year was 3.57 trillion KRW.

Notice: This article is general information based on public reports and disclosures at the time of writing and is not a recommendation to buy or sell specific stocks. Figures and systems may change in the future.