Ahead of the Showdown... Voting Advisory Firms Side with JB Financial

JB Financial and Eollain Face Proxy Battle Over Dividend Expansion at April 30 General Meeting

JB Financial Group and activist private equity fund (PEF) Align Partners are set for a showdown over dividend increases at the upcoming regular shareholders' meeting on the 30th, as major proxy advisory firms have recommended opposing Align Partners' shareholder proposals, drawing attention to the outcome.

According to financial sources on the 19th, global proxy advisory firms such as ISS and Glass Lewis recently issued reports recommending opposition to the shareholder proposals submitted by Align to JB Financial. Align Partners had previously proposed increasing cash dividends and nominating an outside director candidate (Kim Ki-seok, BOA Seoul representative) through their shareholder proposals.

Currently, JB Financial and Align Partners are competing to secure proxy votes ahead of the regular shareholders' meeting scheduled for the 30th. JB Financial decided on a cash dividend of 715 KRW per common share (annual dividend payout ratio of 27.0%), while Align Partners, the second-largest shareholder of JB Financial with 14.04%, has demanded a cash dividend of 900 KRW per common share (annual dividend payout ratio of 33%) through their shareholder proposal, signaling a vote battle.

Regarding outside directors, Align Partners opposed the reappointment of outside director and audit committee candidate Sung Je-hwan (former president of Wonkwang Digital University), whom JB Financial recommended for a second term, and instead nominated their own outside director candidate. Align Partners emphasized, "We believe JB Financial should become a bank that is more valuable to shareholders rather than just a bigger bank," while JB Financial countered, "This year's dividend payout ratio is 27.0%, up 4 percentage points from last year, which is the highest level in the industry."

Meanwhile, proxy advisory firms appear to have sided with JB Financial for now. ISS pointed out regarding Align Partners' dividend increase proposal, "Demanding higher dividends solely because the payout ratio is lower compared to foreign banks could harm shareholder interests." ISS also stated about Align's outside director nomination, "There is no reasonable explanation of how the candidate would contribute to the board."

The Korea Listed Companies Association's Governance Advisory Committee also recommended opposition. The committee stated, "The shareholder proposal for a 900 KRW dividend undermines dividend safety and predictability, so we oppose it," and added, "We consider the board's proposal of 715 KRW an appropriate dividend and support it."

Now, the remaining issue is the vote battle. Looking at JB Financial's governance structure, the largest shareholder is Samyang Corporation and its affiliates, holding 14.61% of shares. The difference with Align Partners (14.04%) is less than 0.50 percentage points. The key will be the choices of other major shareholders such as OK Savings Bank (10.21%), the National Pension Service (7.79%), and PEF The Capital Group (5.11%).