Chairman Park Chang-gu's Decisive Victory in Management Rights Dispute...Institutions and Foreigners Show Trust in Current Management (Comprehensive)

Executive Director Park Cheol-wan Fails to Enter Inside Director Position
Dividend Raised to 4200 Won...Company Proposal Passed
All Three Outside Directors Including Former Constitutional Court Justice Lee Jung-mi Pass Company Proposal
Institutions and Foreigners Choose 'Stability'...Interpreted as Trust in Current Management

[Asia Economy Reporter Hwang Yoon-joo] Chairman Park Chan-gu, who is engaged in a management rights dispute with his nephew Park Cheol-wan, Executive Director of Kumho Petrochemical, secured a decisive victory in the shareholder meeting vote, successfully defending his management rights. The most important agenda item at this general meeting, the appointment of Executive Director Park as an inside director, was rejected. In addition, all major proposals including the audit committee members and outside directors proposed by Kumho Petrochemical were approved. It is interpreted that major domestic and foreign institutional shareholders supported the current management, which achieved remarkable business performance despite the COVID-19 situation. The choice of 'stability' over the radical shareholder-friendly proposals from Executive Director Park's side is being noted.

◆ Park Chan-gu Successfully Defends Management Rights… Park Cheol-wan Expresses Intention to Monitor Management = Kumho Petrochemical held its 44th regular general shareholders' meeting on the 26th at its headquarters in Jung-gu, Seoul, and announced the approval of ▲ financial statements and dividend payments ▲ separation of CEO and chairman of the board (amendment of articles of incorporation) ▲ audit committee members ▲ appointment of inside directors ▲ appointment of three outside directors ▲ and audit committee members who are outside directors.

The most important agenda item at this meeting, the inside director, was appointed with a 64.0% approval rate, with Baek Jong-hoon, Executive Vice President and Head of Sales at Kumho Petrochemical, being selected. Executive Director Park failed to enter the board with 52.7% of the votes. It is reported that Executive Director Park left his seat during the voting.

After the meeting, Executive Director Park's side issued a statement saying, "Regardless of the results of the general meeting, we will fulfill our responsibilities as the largest shareholder to correct the unfriendly shareholder return policy that we have continuously pointed out," and pledged to continue monitoring the current management's actions that harm shareholder value. They also reiterated, "The shareholder proposal is not a management rights dispute but a legitimate exercise of shareholder rights to contribute to the company as shareholders."

The agenda on financial statements and dividend payments also passed with 64.4% approval for the company's proposal. Accordingly, Kumho Petrochemical will pay dividends of 4,200 KRW per common share and 4,250 KRW per preferred share. The high dividend proposal of 11,000 KRW per common share and 11,050 KRW per preferred share proposed by Executive Director Park's side was rejected with 35.6% approval.

The audit committee member (outside director) proposed by the company, Professor Hwang Yi-seok, was approved with 69.3% of the votes. The proposal by Executive Director Park's side, Lee Byung-nam, CEO of Boston Consulting Group Korea Office, was rejected with 30.5% of the votes. The outside directors appointed were Professor Choi Do-sung of Gachon University, former Constitutional Court Justice Lee Jung-mi, and Professor Park Soon-ae of Seoul National University Graduate School of Public Administration, all proposed by the company.

The audit committee member who is an outside director, Professor Choi Do-sung of Gachon University, was also appointed. However, the separation of CEO and chairman of the board was rejected due to insufficient quorum for both the company and Executive Director Park's proposals.

On the 26th, shareholders are attending the '44th Kumho Petrochemical Annual General Meeting' held at Kumho Petrochemical in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

◆ Institutions and Foreign Investors Trust Park Chan-gu's Management Ability… Choose 'Stability' Over Change = The results of this general meeting are seen as a sign of trust from major investors such as institutions and foreign investors toward the current management. Earlier, ISS, the world's largest proxy advisory firm, supported Chairman Park's proposals, and the National Pension Service also effectively recommended voting in favor of Chairman Park's proposals, leading to a prevailing expectation that Chairman Park would successfully defend his management rights.

The management capability is cited as the reason for gaining investor support. Despite the COVID-19 situation last year, Kumho Petrochemical achieved record performance with consolidated sales of 4.8095 trillion KRW and operating profit of 742.1 billion KRW. The debt ratio also significantly decreased from 498% at the time of separation management in 2010 to 72.7% in 2019 and 59.7% in 2020.

A Kumho Petrochemical official explained, "It is limited to attribute the earnings surprise to COVID-19 benefits such as latex rubber gloves. The market demand shifted from natural rubber to synthetic rubber, and the current management responded well to this change."

In particular, the dividend vote, where the company's proposal (4,200 KRW per common share) passed with 64.4% approval and Executive Director Park's proposal was rejected with 35.6%, is interpreted as domestic and foreign institutional investors supporting sustainable growth over extreme shareholder-friendly policies.

The stock price also responded positively to Chairman Park's defense of management rights. Kumho Petrochemical's stock price, which hit an intraday low of 220,000 KRW at 12:55 PM, began to rise around the time the general meeting results became clear.

After the meeting, Chairman Park said, "Above all, I thank the shareholders for their support," and added, "Going forward, our executives and employees, including myself, will work with a more humble mindset to enhance corporate value and strengthen ESG, thereby improving shareholder value."

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