Allain "Global Major Institutional Investors Support Coway Concentrated Voting System"

"National Pension Service Should Also Support the Proposal," Appeals CEO

Activist fund Align Partners (Align) announced on the 25th that major global institutional investors such as the California Public Employees' Retirement System (CalPERS), the California State Teachers' Retirement System (CalSTRS), the British Columbia Investment Management Corporation (BCI), and the Florida State Board of Administration (FSBA) publicly supported the agenda to introduce cumulative voting at Coway's regular shareholders' meeting scheduled for the 31st.

Provided by Align

According to Align on the day, the British Columbia Investment Management Corporation, which manages assets worth $250 billion, explained the specific reasons for exercising its voting rights by stating that "the introduction of cumulative voting protects shareholders' rights, whereas applying cumulative voting separately to inside and outside directors infringes on shareholders' interests." Global proxy advisory firm Glass Lewis also reportedly recommended voting in favor of the cumulative voting agenda, stating that "Align provided meaningful evidence supporting governance improvements through the introduction of cumulative voting."

Earlier, through a public disclosure of proxy solicitation, Align pointed out that "Bang Jun-hyuk, chairman of Netmarble, concurrently serves as chairman of Coway's board, and Seo Jang-won, CEO of Coway, is also from Netmarble. Other directors of Coway were appointed by Netmarble or recommended by directors appointed by Netmarble at the February 2020 extraordinary shareholders' meeting, according to the stock purchase agreement with Woongjin ThinkBig." This highlights concerns about the lack of independence in Coway's board and the excessive influence exerted by the largest shareholder Netmarble, whose stake is about 25%.

▲The three major domestic proxy advisory firms ? Korea ESG Standards Institute, Korea ESG Research Institute, and Sustainvest ? also supported Align's shareholder proposal to introduce cumulative voting and recommended opposing Coway's proposal to apply cumulative voting separately to inside and outside directors.

Lee Chang-hwan, CEO of Align, said, "Cumulative voting is an effective measure to protect minority shareholders' rights in Korea, where most listed companies have controlling shareholders who exert excessive influence on the board relative to their shareholding, which is a core corporate governance issue. This is why the Korea Exchange includes the introduction of cumulative voting among the 15 key governance indicators it recommends."

CEO Lee Chang-hwan appealed, "Since the National Pension Service, one of Coway's major shareholders, explicitly states in its revised fiduciary duty guidelines that it opposes excluding cumulative voting and supports deleting exclusion clauses, we earnestly ask the National Pension Service to exercise voting rights in favor of the cumulative voting proposal we have submitted."

Regarding the global proxy advisory firm ISS's recommendation against the introduction of cumulative voting, CEO Lee Chang-hwan expressed regret. He said, "ISS publicly states in its voting recommendation policies and advisory reports that it basically supports cumulative voting (opposes proposals excluding cumulative voting) as long as there is no risk of abuse. It would be appropriate for ISS to specifically explain how opposing cumulative voting at Coway could be abused, rather than opposing it on the grounds that our shareholder proposal lacks persuasive evidence that it would improve Coway's corporate governance. This stance contradicts ISS's publicly announced policies and positions."