[why&next] Shareholder Proposal Approval Rate 11%... "We Lost but Fought Well"

Only 18 Out of 164 Shareholder Proposals Approved
All 8 Treasury Stock Cancellation Proposals Rejected

As the March regular general shareholders' meeting (GSM) season came to a close, it was revealed that the 164 shareholder proposals submitted received disappointing results.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 3rd, a total of 164 shareholder proposals were submitted at the 2025 regular GSMs held last month across 40 listed companies. Proposals related to executive appointments and board composition accounted for the largest share with 91 cases (55.5%), followed by 30 proposals concerning shareholder returns and capital allocation policies.

However, only a handful of proposals passed the shareholders' meeting hurdle. Of the 164 shareholder proposals, only 18 (11%) were approved, while 90 proposals, accounting for 55% of the total, were rejected. Automatic dismissals also accounted for 56 cases (34.1%). Lee Kyung-yeon, a researcher at Daishin Securities, explained, "There were many cases where proposals were automatically dismissed due to rejection of other proposals or failure to meet quorum and other requirements."

Since this was the first regular GSM season after the value-up program was fully launched, expectations were high for treasury stock cancellations (8 cases), but all were rejected. The cumulative voting system proposed by activist fund Align Partners, which demanded enhanced independence of Coway's board, also failed to materialize.

Jung Eui-jung, CEO of the Korea Shareholders Association, said, "The trend of increasing shareholder proposals amid growing shareholder activism and aspirations for enhancing shareholder value and improving governance is a desirable phenomenon for revitalizing the stock market," but added, "It is regrettable that only about 10% of the proposals passed and all eight proposals related to treasury stock cancellations were rejected."

Although shareholder proposals did not achieve significant success at this regular GSM, there is an assessment that a clear wind of change is blowing in terms of shareholder returns. Researcher Lee pointed out, "Companies still maintain a cautious stance toward direct shareholder demands for treasury stock cancellations," but added, "Regardless of the low approval rate of shareholder proposals, actual corporate treasury stock cancellation activities are showing a clear upward trend."

In fact, the number of disclosures regarding stock cancellation decisions has been rapidly increasing since the end of last year. The number of companies announcing stock cancellation decisions (combined KOSPI and KOSDAQ) increased more than fivefold from 32 in 2019 to 172 in 2024. The amount scheduled for cancellation, which was around 4 trillion KRW in 2023, also rose about threefold to 11.2 trillion KRW last year. Within the KOSPI, the number of stock cancellation decision disclosures by mid-sized companies (27) and small-sized companies (29) last year significantly narrowed the gap with large companies (42).

Researcher Lee said, "Although treasury stock cancellations were not directly approved through shareholder proposals at this year's GSMs, it is significant that many companies are voluntarily engaging in shareholder returns," adding, "In particular, the recent trend of shareholder return policies spreading from large companies to mid- and small-sized companies is expected to bring meaningful changes to mid- and small-cap investment strategies in the future."

However, there are also criticisms that focusing too much on shareholder returns alone to resolve the 'Korea discount' is not advisable. True value-up cannot be achieved solely through treasury stock buybacks or dividend increases; it requires improvements in laws and systems, transparency in governance, and sustainable profitability. CEO Jung emphasized, "The KOSPI price-to-book ratio (PBR), which was around 0.84 at the end of 2004, remains at 0.84 at the end of 2024, highlighting the urgent need to resolve the Korea discount," and added, "Shareholders alone cannot eliminate undervaluation. Financial authorities and companies must strengthen efforts to enhance shareholder value."