Largest Shareholders, Activist Funds, and Voting Advisory Firms 'Oppose'
National Pension Service 'Supports'... Appointment Proposal Likely to Pass
'Cumulative Voting' Method, Passes as Long as Last Place in Votes Is Avoided
The National Pension Service expressed a 'favorable' opinion on Bang Kyung-man, the next president candidate of KT&G. With the National Pension Service's decision, the approval of Bang's appointment is highly likely.
The National Pension Service's Stewardship Responsibility Committee held its 5th meeting on the 21st. They reviewed the voting directions for shareholder meeting agendas of a total of 20 companies, including KT&G and Kumho Petrochemical.
KT&G and Kumho Petrochemical Both Favor the Management Side
The National Pension Service decided to 'support' the appointment of Bang Kyung-man, Senior Vice President of KT&G, as president. They also decided to vote in favor of the appointment of Son Dong-hwan, a professor at Sungkyunkwan University Law School, as an outside director. The rationale was "a direction that contributes more to enhancing shareholder value." However, regarding the approval of the director remuneration limit, they expressed an 'opposition' opinion, citing that the remuneration amount was excessive compared to business performance.
Bang's appointment had been uncertain until now. This was because the largest shareholder (with a 7.11% stake), Industrial Bank of Korea, the activist fund Flashlight Capital Partners (FCP), and the world's largest proxy advisory firm ISS all expressed 'opposition.' Reasons included the decline in KT&G's operating profit since Bang became an inside director in 2021 and poor global performance.
However, with the National Pension Service, the third-largest shareholder (holding 6.36%), deciding to support, smooth approval is expected. In this KT&G shareholder meeting conducted by cumulative voting, two votes per share can be cast. Both votes can be concentrated on one person. Among the candidates?Bang Kyung-man for president, Lim Min-gyu as outside director (both recommended by KT&G), and Son Dong-hwan as outside director (recommended by Industrial Bank of Korea)?the two candidates receiving the most votes will be appointed. Since only avoiding last place is necessary, Bang's appointment, backed by the National Pension Service's support, is expected to pass in practice.
Regarding Kumho Petrochemical's agenda on treasury stock cancellation, the National Pension Service decided to cast a dissenting vote. For the appointment of outside directors, they decided to support Choi Do-seong, recommended by the board. They explained that compared to Kim Kyung-ho, recommended by former executive director Park Cheol-wan and the activist fund Cha Partners to whom he delegated voting rights, Choi better aligns with "long-term shareholder value enhancement."
Massive Opposition to Inside and Outside Director Candidates
They issued numerous opposition decisions on director candidates of other companies. For the appointment of outside director and audit committee member Jeong Chan-hyung at Woori Financial Group, opposition was due to a "history of lax oversight." For Naver's outside director candidate Byun Jae-sang, opposition was due to "damage to corporate value." For HD Hyundai Heavy Industries' inside director Lee Sang-gyun, opposition was also due to "damage to corporate value." For KG Steel's inside director candidate Kwak Jeong-hyun, opposition was due to excessive concurrent positions. For Cosmo Advanced Materials' inside director candidates Hong Dong-hwan, Ahn Seong-duk, and Kim Chang-soo, and Cosmo Chemical's Ahn Seong-duk, opposition was due to neglect of monitoring duties. For Hanwha Systems' inside director candidate Uh Seong-cheol, opposition was due to a history of damaging corporate value.
On the other hand, they decided to support the appointment of CJ CGV's inside director Lee Dong-hyun and Dongkuk Holdings' inside director Jang Se-wook. DGB Financial Group's outside director and audit committee candidate Kim Hyo-shin was rated 'neutral,' and other agendas were supported. Neutral means that the National Pension Service exercises its voting rights proportionally according to the approval and disapproval ratios of other shareholders.
Regarding Park Systems' agenda on granting new stock options, they opposed it, judging that there could be conflicts between the monitoring duties of outside directors and personal interests. All other agendas were approved. They opposed HYBE's partial amendment to the articles of incorporation, citing potential disruption to board operations.
Additionally, for GS Cell, KCC Glass, NH Investment & Securities, POSCO Future M, and KT, they opposed the approval of director remuneration limits but approved all other agendas. For Shinhan Financial Group's agendas, they decided to approve all.
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