With the regular shareholders meeting coming up in Mar., activist funds have launched a full-fledged offensive, rolling out shareholder proposals and open letters in quick succession. The core demands are stronger shareholder returns, such as canceling treasury shares and increasing dividends, and governance reforms, such as restructuring boards.
British hedge fund Pallas Capital said on the 10th that it submitted a shareholder proposal to LG Chem. The proposal includes disclosing the net asset value (NAV) discount rate in its plan to boost corporate value, introducing stock-linked compensation for management, and reflecting the NAV discount rate and return on equity (ROE) in key performance indicators (KPI).
It also demanded expanding the monetization of equity in LG Energy Solution, buying back and canceling treasury shares, and appointing independent directors. Pallas Capital said the proposal is intended to create a venue for shareholders to express their views on ways to enhance corporate value at the regular meeting.
Domestic activist funds are also active. Align Partners Asset Management sent an open letter to DB Insurance calling for a management strategy centered on return on required capital (ROR) and for upgrading medium-term capital management and shareholder return policies. It also proposed amending the articles of incorporation and appointing independent directors at A+ Asset and Coway, and demanded governance improvements at Dentium, Gabia, and SOLUM.
Truston Asset Management sent an open letter to KCC demanding the monetization of Samsung C&T equity and the cancellation of treasury shares. Arguing that selling the Samsung C&T equity could significantly boost shareholder value, it asked the board for an official response by the 11th of next month. It also demanded that Taekwang Industrial buy all 230,000 outstanding publicly traded shares (21.1%) held by minority shareholders to delist and introduce a lead independent director system.
Life Asset Management proposed that BNK Financial Group introduce a stock compensation scheme for board members, stressing alignment of interests between shareholders and management.
This year's regular shareholders meetings of listed companies are expected to see intense shareholder rights exercises and management defense due to last year's amendment of the Commercial Act and the announcement of measures to strengthen the stewardship code.
The Corporate Governance Center of law firm YulChon predicted for this year's regular meeting season that "activist funds' shareholder proposal offensives will become more active due to the recent capital market climate of corporate governance reforms and boosting corporate value."