With disputes surrounding the management rights of Korea Zinc ongoing for six months, global proxy advisory firm Glass Lewis recommended approving the nomination of five board candidates from the Young Poong-MBK Partners side. Unlike in the previous January extraordinary shareholders' meeting, where only the candidates proposed by Chairman Choi Yoon-bum were supported, this time the recommendation favored Young Poong-MBK.
With foreign shareholders holding a 7% equity stake, their voting intentions are crucial. Both major proxy advisory firms (ISS and Glass Lewis) have shown a favorable stance toward Young Poong-MBK, allowing them to breathe a sigh of relief.
According to the investment banking (IB) industry on the 20th, Glass Lewis sent an analysis report on the agenda for the Korea Zinc regular shareholders' meeting to institutional investors that morning (Korean time).
Glass Lewis recommended approving the amendment to limit the board size to 19 members and supported the five candidates recommended by Young Poong-MBK (Kim Yong-jin, Kim Jae-seop, Son Ho-sang, Jeong Chang-hwa, Cheon Jun-beom). For the candidates from Chairman Choi's side, it advised voting in favor of three (Kim Bo-young, James Andrew Murphy, Jeong Da-mi).
In its report, Glass Lewis noted, “Chairman Choi and the Korea Zinc management's actions are a typical example of poor corporate governance, setting a dangerous precedent,” adding that “creating a cross-shareholding structure a day before the extraordinary shareholders' meeting to limit Young Poong's voting rights violates shareholder rights and is an overt entrenchment strategy prioritizing only the monopolization of management rights.”
Glass Lewis further supported Young Poong-MBK's proposal of 2 trillion won instead of the 1.6 trillion won suggested by Chairman Choi regarding the conversion of discretionary reserves to retained earnings. It also backed the position of Young Poong-MBK that all treasury shares held by Korea Zinc should be burned. Additionally, Glass Lewis stated its opposition to all three candidates for the audit committee recommended by Chairman Choi (Kwon Soon-beom, Lee Min-ho, Seo Dae-won).
Earlier, on the 15th, another global proxy advisory firm, ISS, also expressed support for all proposals put forward by Young Poong. In contrast, it advised opposing all proposals made by Young Poong Precision Corporation, a subsidiary of Chairman Choi, such as the introduction of cumulative voting and the introduction of cash dividends.
A Young Poong-MBK representative said, “Both ISS and Glass Lewis, representative global proxy advisory firms, have strongly criticized the illegal actions of Chairman Choi's side that restricted Young Poong's voting rights, noting that the governance of Korea Zinc has been seriously damaged,” adding, “Several major institutional investors are reviewing the report and will support our board candidates.”
Meanwhile, Glass Lewis's latest report also highlights concerns over the situation regarding Homeplus's corporate rehabilitation, drawing attention. Glass Lewis stated, “The situation at Homeplus may raise concerns about Young Poong-MBK reducing some long-term investments or selling specific assets to provide cash dividends,” and noted that “this could appear as Young Poong-MBK securing funds to address Homeplus's short-term liability issues and cover operational losses at Young Poong.”
In response, an MBK representative stated, “These are unfounded concerns, detached from reality,” explaining that “the composition of investors varies for each investment, and the invested funds are also different.”