Stocks in Management Disputes Ahead of Shareholders' Meeting Vote... Silent Stock Prices

On the 11th, an executive briefing session with Park Cheol-wan was held at the Westin Chosun Hotel in Jung-gu, Seoul, under the theme "Proposals to Enhance the Corporate Value of Kumho Petrochemical." Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Ji Yeon-jin] Listed companies embroiled in management disputes are seeing their stock prices decline ahead of the vote showdown at this month's regular shareholders' meetings. Typically, management disputes in companies are considered a factor for stock price increases due to expectations of expanded shareholder-friendly policies such as dividend increases, but the stock prices are moving in the opposite direction, drawing attention to the underlying reasons.

According to the Korea Exchange on the 19th, Kumho Petrochemical's stock price has fallen 19.49% from January 28, when Executive Director Park Cheol-wan initiated the so-called 'nephew's rebellion,' until the day before. Park, the nephew of Chairman Park Chan-gu and the largest individual shareholder (10%), made shareholder proposals demanding dividend increases and board member replacements, leading to a vote showdown at the regular shareholders' meeting on the 26th of this month. On January 28, immediately after Park's shareholder proposal, the stock price surged 23% in one day and reached a 52-week high of 293,500 KRW on February 5, but has since weakened. This contrasts with chemical-related stocks, which have shown strength as beneficiaries of inflation due to rising U.S. Treasury yields.

Since last year, Korea & Company, which has been experiencing a fraternal management dispute, saw its stock price drop 12.82% from February 24, when eldest son and CEO Cho Hyun-sik disclosed a shareholder proposal, until the day before. At that time, Cho resigned as CEO taking responsibility for the management dispute and sent a shareholder letter proposing Professor Lee Han-sang of Korea University Business School as an outside director and audit committee member. He will face off against his younger brother, President Cho Hyun-beom, at Korea & Company's regular shareholders' meeting on the 30th of this month. Despite the eldest daughter, Cho Hee-kyung, Chairwoman of the Korea Tire Sharing Foundation, expressing her intention to support Cho's shareholder proposal, the stock price remains flat.

Hanjin, the logistics affiliate of the Hanjin Group, will face off against its second-largest shareholder, private equity fund HYK Partners, at the regular shareholders' meeting on the 25th of this month. After HYK Partners sent a shareholder letter on December 8 last year calling for governance improvements and enhancement of shareholder value, Hanjin's stock price showed a temporary rise but has fallen 2.43% until the day before.

Typically, management disputes in companies are considered a factor for stock price increases due to expectations of expanded shareholder-friendly policies such as dividend increases. In the case of Hanjin Kal, where management disputes intensified last year, the stock price more than doubled ahead of the shareholders' meeting vote showdown. Samsung Securities researcher Cho Hyun-ryeol said, "In management disputes, stock prices tend to rise when there are noisy issues such as disclosures of share purchases between both sides, but this time, since it is quietly being done by gathering voting rights from small shareholders without share purchases, the stock price seems not to be moving."

This content was produced with the assistance of AI translation services.