Kumho Petrochemical AGM D-1... Park Cheol-wan as Key Variable for Inside Director Entry

Most Institutions Including National Pension Fund Support Kumho Petrochemical
Park Cheol-wan's Appointment as Inside Director May Prolong Management Dispute

[Asia Economy Reporter Hwang Yoon-joo] The shareholder meeting showdown between Park Chan-gu, chairman of Kumho Petrochemical, and his nephew Park Cheol-wan, executive director, over management rights is just one day away. Depending on the outcome, matters directly related to company management, such as the board of directors or audit committee members, will be decided. So far, Chairman Park has secured a favorable position, but if Executive Director Park joins the board, there is a high possibility that the dispute will be prolonged.

According to the business community on the 25th, Kumho Petrochemical will hold its regular shareholder meeting on the morning of the 26th at its headquarters in Jung-gu, Seoul. The agenda includes approval of financial statements, appointment of inside and outside directors, and amendments to the articles of incorporation. The biggest point of interest in this meeting is whether Executive Director Park will be listed on the board of directors. The approval of the high dividend proposal put forward by Executive Director Park is also a matter of interest.

At present, Chairman Park is likely to succeed in this 'battle for the high ground.' The voting shares at this meeting are 14.84% for Chairman Park's side and 10% for Executive Director Park. The National Pension Service, the second-largest shareholder, holds 8.25%, while other domestic institutional investors hold 12%, and foreign investors hold 28.31%. Individual small shareholders account for about 8%.

In this situation, it is highly likely that the National Pension Service will support Chairman Park's side, resulting in the approval of most company proposals. The day before, the National Pension Service's Stewardship Responsibility Committee recommended voting in favor of most of the proposals put forward by the company at its meeting. Additionally, ISS, the world's largest proxy advisory firm, and the Korea Corporate Governance Service (KCGS) also recommended supporting all company proposals. Glass Lewis, the world's second-largest proxy advisory firm, supported the company's side on the appointment of outside directors but backed Executive Director Park's side on the appointment of inside directors.

A business community official said, "Chairman Park achieved record-high performance during the COVID-19 situation and there were no major issues related to company management, so he received institutional support," adding, "There is little justification to side with Executive Director Park."

However, it is difficult to say that Chairman Park has completely secured victory. The difference in shareholding between the two sides is less than 5%, and the National Pension Service supported Executive Director Park's proposal for the appointment of inside directors. Furthermore, ESG advisory firm Sustainvest, the California Public Employees' Retirement System, and the Norwegian Central Bank Investment Management also sided with Executive Director Park. If Executive Director Park is appointed as an inside director, he will be able to intervene directly or indirectly in major management decisions, which would put the company in a difficult position.

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