March General Meeting Season Opens... Shareholder Returns and Board Restructuring as Key Topics

Full-scale Shareholder Meetings Begin in Mid-March
Major Shareholder Return Policies in Line with Government Value-Up Initiative
Board Expertise Strengthened with New Director Appointments
Korea Zinc vs. Youngpoong and MBK Partners Showdown Draws Attention

As the regular March shareholder meeting season approaches, companies are accelerating their steps. The key topics for this shareholder meeting season are shareholder returns and the board of directors. In line with the government's value-up (corporate value enhancement) policy, companies are expected to actively introduce shareholder return policies again this year, following last year. Additionally, amid growing domestic and international management uncertainties, companies are strengthening board expertise and promoting entry into new businesses to nurture future growth engines.

The temporary shareholders' meeting of Korea Zinc held on the afternoon of January 23 at the Grand Hyatt Seoul in Yongsan-gu, Seoul is in progress. Photo by Jo Yong-jun

According to the business community on the 12th, listed companies will begin holding shareholder meetings in earnest from mid-month, sequentially presenting and addressing agenda items such as approval of financial statements, amendments to articles of incorporation, appointment of directors, and approval of director remuneration limits.

With the continuation of the value-up trend, shareholder return policies are expected to expand again this year, drawing attention. SK Hynix, which posted record-high earnings last year, raised its annual fixed dividend from 1,200 won to 1,500 won, a 25% increase, expanding the total cash dividend to about 1 trillion won annually. Hyundai Motor Company, reflecting strong performance, decided on a year-end dividend of 6,000 won per share for 2024. Accordingly, the annual dividend was set at a record high of 12,000 won per share, up 5.3% from the previous year.

Attention is also focused on the outcome of the management rights dispute at Korea Zinc. Korea Zinc and Yeongpoong·MBK Partners, who have been competing to acquire shares for management rights, will face off directly at Korea Zinc's regular shareholder meeting scheduled for the end of this month. Yeongpoong·MBK submitted shareholder proposals demanding the appointment of a temporary chairman, cancellation of all treasury shares, and the appointment of 5 to 17 directors at Korea Zinc's regular shareholder meeting. In particular, as the court recognized the validity of the cumulative voting system resolved at the previous extraordinary shareholder meeting, both sides are expected to engage in a fierce vote battle over control and defense of the board.

The cumulative voting system proposed by Chairman Choi Yoon-beom of Korea Zinc is a system where each shareholder receives as many votes as the number of directors to be elected multiplied by the number of shares held when appointing directors. Minority shareholder proposals are also increasing. The cumulative voting system, widely known due to the Korea Zinc management dispute, has become a hot issue.

Coway will decide at the shareholder meeting whether to introduce the cumulative voting system, a mechanism to strengthen minority shareholders' director appointments, following a shareholder proposal from the activist fund Align Partners. Emart will present the shareholder proposal titled 'Disclosure of Corporate Value Enhancement Plans' from the minority shareholder platform 'ACT' and the Economic Reform Solidarity at its regular shareholder meeting.

There is also a notable movement to strengthen board expertise by recruiting highly capable and experienced individuals as directors. Samsung Electronics is reinforcing its board with three semiconductor experts. It has recruited Lee Hyuk-jae, a semiconductor technology expert and professor at Seoul National University's Department of Electrical and Computer Engineering, as a new outside director. Additionally, it has nominated Jeon Young-hyun, head of the Device Solutions (DS) division (vice chairman), and Song Jae-hyuk, CTO of the DS division and head of the Semiconductor Research Institute (president), as new inside directors. Given previous criticism that the board had more economic bureaucrats than technical experts, this move is interpreted as an effort to enhance expertise and strengthen the ultra-competitive technological edge.

Hyundai Motor Company has appointed a large number of global talents. It newly appointed three outside directors: Kim Soo-i, former head of global private equity at the Canada Pension Plan Investment Board (CPPIB); Do Jin-myung, former vice president of Qualcomm Asia; and Benjamin Tan, former Asia portfolio manager at the Government of Singapore Investment Corporation (GIC).

SK Group's holding company SK Inc., which has a broad energy business portfolio, nominated energy expert Lee Kwan-young, a researcher at the Korea Institute of Science and Technology (KIST), and international relations expert Jung Jong-ho, a professor at Seoul National University's Graduate School of International Studies, as new outside directors. CJ CheilJedang, the top food company, recommended Jeong Hwang-geun, former Minister of Agriculture, Food and Rural Affairs, as an outside director candidate.

Many companies are also amending their articles of incorporation to add business purposes to lay the foundation for new businesses. Hyundai Motor Company is accelerating the expansion of its hydrogen business ecosystem by adding 'hydrogen business and other related businesses' to its business purposes. Hotel Shilla, which has incurred losses in the duty-free business, is adding 'comprehensive resort business,' 'condominium sales and operation,' and 'elderly housing and leisure welfare installation and operation business' to its business purposes.