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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Institutional Shareholder Services (ISS), one of the world’s largest proxy advisory firms, has recommended that shareholders vote against the reappointment of Korea Zinc Chairman Choi Yoon-beom as an inside director at the company’s upcoming annual general meeting.
According to investment banking sources on Sunday, ISS released its analysis of agenda items for Korea Zinc’s March 24 shareholder meeting, outlining its recommendations on board appointments and other key proposals.
ISS expressed support for the proposal to elect five directors through a cumulative voting system. Under this structure, the proxy adviser recommended backing five candidates: Hwang Deok-nam, the board chair nominated by Korea Zinc; Walter Field McLellan, nominated by the Crucible JV in the United States as a non-executive director candidate; and Park Byung-wook, Choi Byung-il, and Lee Sun-sook, who were put forward by a consortium of Young Poong and MBK Partners.
However, ISS advised shareholders to vote against the reappointment of Chairman Choi, who is seeking a two-year term as an inside director at the meeting.
In its report, ISS acknowledged Korea Zinc’s improved financial performance and share price gains in recent years, but said governance issues warranted closer scrutiny. The firm suggested that certain corporate financial decisions and shareholding structures may have been used to reinforce Chairman Choi’s control of the company.
ISS cited several examples, including the company’s attempt to pursue a rights offering after conducting share buybacks, controversy surrounding cross-shareholding arrangements that limited Young Poong’s voting rights, and questions over board oversight during large strategic investment decisions.
The advisory firm also raised concerns about retirement compensation rules applied to honorary chairmen who do not hold registered executive positions. Under the current structure, these figures are eligible for retirement payouts calculated at four times the level applied to the chief executive. ISS supported a proposal to revise the relevant provisions, noting that the two honorary chairmen are family members of the current chairman and that the compensation structure may not align with global governance standards.
Honorary chairmen Choi Chang-young and Choi Chang-geun are the eldest and third sons of Korea Zinc founder Choi Ki-ho. ISS added that the company’s argument that the compensation arrangement had previously been approved at shareholder meetings does not automatically guarantee its appropriateness.
The proxy adviser emphasized that restoring checks and balances within the company’s governance structure should be a priority. It said a more balanced board composition with independent and experienced directors could help rebuild investor confidence.
Market observers say ISS’s recommendation could influence the votes of so-called swing shareholders at the upcoming meeting.
The Young Poong–MBK Partners alliance currently holds about 42.1% of the voting stake in Korea Zinc, while Chairman Choi’s family and friendly shareholders including Hanwha and LG Chem control around 27.9%. The U.S. joint venture holds a 10.8% stake, while the remaining roughly 19% is held by swing voters such as the National Pension Service and foreign institutional investors.
Among them, the National Pension Service holds about 5%, while large foreign institutions are estimated to own around 4%. The rest is held by domestic and overseas retail investors and other corporate shareholders.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
