With Chair Choi Yoon-beom of Korea Zinc succeeding in defending management control, the company's U.S. integrated smelter construction project, the "Crucible Project," is also expected to gain momentum. Korea Zinc has stressed that leadership, including Chair Choi, must remain in place so that key businesses, including construction of the U.S. Smelter, can proceed without disruption.
On the 24th, at Korea Zinc's 52nd annual general meeting, Chair Choi was reappointed as an inside director, receiving the second-highest number of votes (15,608,388) among the seven director candidates.
Before the director appointment agenda, Korea Zinc rejected Young Poong and MBK Partners' proposal to appoint six directors and approved Chair Choi's side's proposal to appoint five.
Young Poong planned to use this shareholders meeting to replace as many of Chair Choi's expiring board members (Choi Yoon-beom, Jung Tae-woong, Hwang Deok-nam, Kim Do-hyun, and Lee Min-ho) as possible and reshape the board. The aim was to change the composition from 11 for Chair Choi's side and 4 for Young Poong's side before the meeting, so that Chair Choi's side could not hold a majority, thereby strengthening checks on management.
However, with the number of new director appointments reduced to five, and outside director Hwang Deok-nam—proposed by the Korea Zinc board along with Chair Choi—also reappointed, the planned shift in the board's balance did not materialize.
That day, Korea Zinc appointed, including Chair Choi and Director Hwang, Walter Field McLaren, an other non-executive director proposed by the joint venture with the U.S. Department of War, Choi Yeon-seok, an other non-executive director proposed by Young Poong, and outside director Lee Sun-sook.
As a result, the Korea Zinc board was reorganized into seven from Chair Choi's side, five from Young Poong's side, and one from the Crucible joint venture (JV), viewed as an ally of Chair Choi. One remaining board seat was left vacant after the proposal to amend the articles of incorporation to expand the audit committee via separate elections—proposed by Chair Choi's side—was voted down. Korea Zinc is expected to appoint a new audit committee member by September, when the amended Commercial Act mandating separate elections for audit committee members takes effect.
However, because separate election of audit committee members is subject to a rule capping each shareholder's voting rights at 3%, many view it as favorable to Chair Choi's side, whose equity is dispersed. In the vote on the audit committee appointment agenda that day, incumbent outside director and auditor Kim Bo-young was appointed. This has led to analysis that Chair Choi has effectively secured a board majority.
Korea Zinc, which is pursuing the Crucible Project with the U.S. government—investing 11 trillion won to build a local U.S. smelter—can now accelerate the project. In a prior shareholder letter, Korea Zinc also noted, "For the project to succeed, the current leadership, which has consistently proven its management capability, must not be interrupted."
However, many analysts say it is hard to see Chair Choi maintaining stable control, as the National Pension Service and others effectively opposed the director appointment agenda, including Chair Choi, ahead of the shareholders meeting, saying there was a record of "damaging corporate value or infringing shareholder rights."
The National Pension Service, a major shareholder holding 5.20% of Korea Zinc's equity, decided at a fiduciary responsibility committee meeting on the 19th not to exercise voting rights on the agenda to appoint Chair Choi.
In the industry, the view is that factors such as Korea Zinc's planned 250 billion won rights offering, allegations of overvaluing corporate value during the acquisition of Igunio Holdings, and controversy over investment losses at One Asia Partners influenced the decision after Chair Choi's appointment.
Young Poong said after the shareholders meeting that it had established a basis to keep Chair Choi's side in check. In a statement, Young Poong said, "On the surface, Chair Choi's side kept a board majority, but the previously tilted 4-to-11 balance has narrowed to 8-to-5," adding, "Substantive checks and verification across all decision-making will be unavoidable going forward."
Meanwhile, among the items on the agenda, the proposal to amend the articles of incorporation for quarterly dividends and the proposal to extend the board meeting notice period to three days before the meeting were approved. The proposal to raise the director compensation cap from 10 billion won to 12 billion won also passed.
All other shareholder-proposed items were voted down. Previously, Young Poong had proposed amendments to the articles of incorporation to introduce a duty of loyalty for directors when issuing new shares, to conduct a stock split, to adopt an executive officer system, and to change the chair of the shareholders meeting.