Global proxy advisory firm Institutional Shareholder Services (ISS) recommended that organizations oppose the introduction of a cumulative voting system at the extraordinary shareholders meeting of Korea Zinc scheduled for the 23rd. Additionally, ISS also advised opposing the appointment of all outside director candidates recommended by the Korea Zinc board.
On the 9th (Korean time), ISS sent an agenda analysis report to institutional investors recommending the exercise of voting rights on the aforementioned matters at Korea Zinc's extraordinary shareholders meeting.
ISS stated, “Generally, a cumulative voting system is considered beneficial to minority shareholders, but in this case, it may produce unintended results that dilute the reforms sought by MBK and Youngpoong.” The intent behind Korea Zinc’s push for a cumulative voting system at this extraordinary meeting is interpreted as undermining its original purpose, namely the preservation of Chairman Choi Yoon-beom's position.
ISS recommended applying the general voting method of 'one vote per share' instead of a cumulative voting system, while reducing the size of the board of directors to 16 members. This implies agreement with Chairman Choi’s proposal to set a cap on the number of board members.
However, ISS recommended opposition to all seven outside director candidates recommended by Chairman Choi. This implies that personnel from Chairman Choi's side should no longer join the board to improve Korea Zinc's governance.
Given that the current board consists of 12 members (excluding outside director Seong Yong-rak), ISS believes that the remaining four seats should be filled by candidates from MBK and Youngpoong, namely Son Ho-sang, a POSCO chair professor; Jung Chang-hwa, former head of the Future Technology Research Center at POSCO Holdings; Kim Kwang-il, vice chairman of MBK Partners; and Kwon Kwang-seok, former chairman of Woori Bank.
Additionally, ISS pointed out the need for reforms, mentioning Chairman Choi's side's public buyout of treasury shares, which imposed excessive liabilities on the company, and the already abandoned 2.5 trillion won capital increase attempt, as there are concerns regarding the current board of Korea Zinc and the need to improve board oversight.