All Shareholder Proposals by Alline Rejected
JB Financial Group won the proxy battle over dividends against the activist private equity fund Align Partners.
According to the financial sector on the 30th, JB Financial passed a resolution to pay a dividend of 715 KRW per common share at the regular shareholders' meeting held at the main auditorium in Jeonju, Jeollabuk-do. In addition, all outside director candidates recommended by the JB Financial board, Yoo Kwan-woo and Sung Je-hwan, were approved.
On the other hand, all shareholder proposals from Align Partners, the second largest shareholder of JB Financial (14.04%), were rejected. Align proposed a dividend of 900 KRW per common share and nominated Kim Ki-seok, former Bank of America Seoul representative, as an outside director candidate, but both proposals were rejected.
Align had previously stated, "We believe JB Financial should become a bank that is more valuable to shareholders rather than just a bigger bank," demanding an increase in dividends. When their demand was not accepted, they proposed a dividend of 900 KRW per common share and launched a full-scale proxy battle.
The confrontation between the two sides attracted attention in the financial sector as the largest shareholder, Samyang Corporation and its affiliates (14.61%), and the second largest shareholder, Align Partners, held similar stakes. Attention was also focused on the choice of OK Savings Bank, which holds about 10% of shares and ranks as the third largest shareholder.
The tense standoff began to tilt somewhat in favor of JB Financial as proxy advisory firms sided with JB Financial ahead of the main vote. Global proxy advisory firms such as ISS and Glass Lewis recently recommended opposing Align’s shareholder proposals submitted to JB Financial.
ISS pointed out regarding Align Partners’ proposal to increase dividends, "Demanding higher dividends solely because the dividend payout ratio is lower compared to foreign banks could harm shareholders' interests." ISS also stated about Align’s outside director nominee, "There is no reasonable explanation of how the candidate would contribute to the board."
The Korea Listed Companies Association’s Governance Advisory Committee also supported JB Financial, stating, "We oppose Align Partners’ shareholder proposal of a 900 KRW dividend as it undermines dividend safety and predictability," and "We consider the board’s proposal of 715 KRW as an appropriate dividend and support it."
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