The Korea ESG Evaluation Institute, a proxy advisory firm, expressed support for the current management's proposal for a special shareholders' meeting of Korea Zinc. Korea Zinc is set to hold this meeting on the 23rd. On that day, a fierce vote contest is expected between the current management of Korea Zinc and the private equity firm MBK Partners, along with the Youngpoong Alliance, attempting a hostile takeover.
For the upcoming special shareholders' meeting on the 23rd, Korea Zinc proposed several agendas, including ▲taking steps to protect minority shareholders ▲introducing a cumulative voting system ▲quarterly dividends ▲appointing the chair of the board from outside directors ▲setting an upper limit on the number of directors. The focus is on enhancing shareholder rights and increasing the independence and efficiency of the board. Meanwhile, the MBK and Youngpoong sides have also raised agendas including ▲introducing an executive officer system and ▲appointing 14 new directors.
On the 7th, the Korea ESG Evaluation Institute recommended support for the current management's agenda through an analysis of items for the special shareholders' meeting, noting, "The future growth strategy is clear, and efforts for improving governance and enhancing shareholder value are evident. The current management's side is more preferable in terms of Korea Zinc's long-term sustainable growth and enhancing shareholder rights."
In particular, the shareholder return rate increased to around 70% following the appointment of Chairman Choi Yoon-beom, and the strengthening of ESG (environment, social, governance) management was also positively received. The efforts to enhance shareholder value in the long term, presenting future growth engines through the new business triad drive, were also cited as supporting evidence.
The Korea ESG Evaluation Institute stated, "Korea Zinc outperforms Youngpoong in terms of management performance and shareholder returns, as well as ESG evaluations," adding, "While private equity management is quite effective for improving the performance of underperforming corporations, it is doubtful whether it would assist in the management of Korea Zinc, which has a strong financial structure, and it is difficult to determine an advantage in enhancing corporate value."
The Korea ESG Evaluation Institute evaluated that Korea Zinc's financial performance and investment metrics over the last three years are excellent. Korea Zinc achieved operating profit and net profit each year from 2021 to 2023 and maintained a stable debt ratio of around 20-30%. The dividend payout ratio increased from 46.8% in 2021 to 50.9% in 2022, and 59.5% in 2023. The price-to-earnings ratio (PER) also improved from 12 times in 2021 to 13.9 times in 2022, and 19.1 times in 2023.
The Korea ESG Evaluation Institute analyzed that, while the special shareholders' meeting agenda consists of six main items with numerous detailed agendas, the core content can be summarized into several key points, saying, "The current management's proposals revolve around introducing a cumulative voting system, setting an upper limit of 19 directors, and appointing seven new directors."
The Korea ESG Evaluation Institute presented several criteria necessary for general shareholders to decide on Korea Zinc's special shareholders' meeting agenda. First, it considers, "Who should take on management to aid future sustainable growth and enhance shareholder rights?" Then, it also mentioned that it must examine whether Korea Zinc is facing a situation that could lead to a drastic change in management control and what positive or negative changes may occur if MBK gains control.
The Korea ESG Evaluation Institute pointed out, "We also need to reconsider whether operating a large board with 27 members is truly an efficient choice." If all 14 candidates for directors proposed by MBK and Youngpoong are appointed, the total number of board members could become excessively large. Furthermore, considering the characteristics of private equity funds, whether there are concerns regarding overseas sales could also be an important criterion for decision-making from the perspective of general shareholders.
A Korea Zinc official stated, "I think this reflects a positive assessment of our efforts to enhance shareholder value and implement advanced governance," adding, "We will continue to work together with the management and employees to develop the company as a new growth driver, maximize shareholder benefits, and consistently listen to the voices of shareholders, ensuring we deliver results in return."