Key Points to Watch in the Shareholders' Meeting Season: Dividends, Female Outside Directors, and New Businesses

Major Listed Companies Including Samsung Electronics Hold General Meetings on the 16th

August Capital Market Act Amendment Takes Effect... Accelerated Recruitment of Female Outside Directors

Focus on New Business, Strengthening ESG Management, and Responding to Serious Accident Punishment Act

Employees arriving at Samsung Electronics Seocho Building on January 7. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Chae-seok] Starting with Samsung Electronics on the 16th, major listed companies such as POSCO, LG Chem, Hyundai Motor, and LG Electronics will hold consecutive online and offline general meetings of shareholders. The main agenda items for this year's shareholder meeting season include dividend expansion, appointment of female outside directors, enhancement of shareholder value through strengthened ESG (environmental, social, and governance) management, and restructuring of new businesses.

Companies 'Appeasing Shareholders' with Dividend Expansion

According to the business community on the 1st, major companies plan to propose dividend increases as an agenda item at this year's shareholder meetings. They have increased shareholder dividends following record-breaking performance driven by the COVID-19 special demand. SK Hynix decided on a dividend per share of 1,540 won for 2021, which is more than 30% higher than the previous year's 1,170 won. They will apply a new dividend policy from this year through 2024, raising the fixed dividend per share from 1,000 won to 1,200 won.

Some companies increased dividends by as much as tenfold. Hyosung TNC decided to pay 50,000 won per common share, a tenfold increase from the previous year's 5,000 won per share. SK announced a dividend of 8,000 won per share, the highest since the launch of its integrated holding company in 2015. Kia also decided to pay 3,000 won per share as a year-end dividend last year, three times higher than the previous year. An industry insider explained, "Last year, companies posted record-breaking results, and there is a trend of increasing dividends as part of strengthening ESG management." There is also analysis that this move is in response to collective actions by minority shareholders demanding increased shareholder returns.

August Capital Market Act Amendment Takes Effect... Accelerated Recruitment of Female Outside Directors

Ahead of the new Capital Market Act taking effect in August, companies are actively moving to appoint female outside directors. The new law requires listed companies with assets exceeding 2 trillion won to avoid boards composed solely of one gender. In effect, it mandates the inclusion of at least one female director.

Companies that previously had all-male boards are busy recruiting female outside directors. Within the LG Group, LG Chem, LG Display, and LG Innotek plan to hold shareholder meetings on the 23rd and appoint their first female outside directors. LG Chem will appoint Professor Hyun-Joo Lee from KAIST’s Department of Biological Chemical Engineering and Professor Hwa-Soon Cho from Yonsei University’s Department of Political Science and Diplomacy; LG Display will appoint Professor Jung-Hye Kang from the Seoul National University of Science and Technology Law School; and LG Innotek will appoint Professor Hee-Jung Lee from Korea University Law School. Previously, subsidiaries such as LG Corp., LG Electronics, LG Uplus, and LG Energy Solution already appointed female outside directors at last year’s shareholder meetings. Additionally, Samsung Engineering, Hanwha Systems, and LX International will appoint their first female outside directors in their history at this year’s shareholder meetings.

At Samsung Electronics, which already has female outside directors, attention is focused on the possibility of the first female chairperson of the board. The current chairperson, former Minister of Strategy and Finance Jae-Wan Park, will step down next month upon term expiration. Among the candidates for successor is Sun-Wook Kim, former head of the Ministry of Government Legislation and former president of Ewha Womans University, who has served as an outside director at Samsung Electronics since 2018. Samsung Electronics has yet to have a female chairperson of the board. Furthermore, at the shareholder meeting on the 16th, Samsung Electronics plans to appoint Han Hwa-Jin, a distinguished professor at the National Science and Technology Human Resources Development Institute and former environmental secretary at the Blue House during the Lee Myung-bak administration (2009?2010), as a female outside director.

Strengthening Future New Businesses... ESG Also Key

At the shareholder meeting on the 24th, LG Electronics will add the following to its business objectives: ▲manufacturing and sales of medical devices ▲blockchain-based software development and sales, trading and brokerage of crypto assets ▲line licensing of intellectual property such as patents. Given the recent announcement to discontinue the solar panel business, this is interpreted as accelerating new business discovery through 'selection and concentration.' The inclusion of blockchain and medical device businesses suggests a full-scale launch of rapidly growing medical device and non-fungible token (NFT) related businesses. LG Electronics recently collaborated with a digital art platform company to launch a service that allows viewing NFT artworks on TVs. Starting with the home beauty device 'LG Pra.L' in 2017, LG Electronics has expanded its healthcare business by releasing home-use hair loss treatment devices in 2020 and pain relief devices earlier this year. Kim Kwang-Soo, a researcher at Ebest Investment & Securities, said, "LG Electronics is expected to strengthen investments in future growth businesses such as automotive electronics, robotics, and smart solutions/platforms," adding, "Equity investments to expand new businesses are also anticipated."

LS Electric, a manufacturer of power equipment, plans to spin off its electric vehicle parts business to strengthen competitiveness in new businesses. At the shareholder meeting on the 28th, they will seek approval to split the electric vehicle parts production division, 'EV Replay,' and establish a new company, 'LS e-Mobility Solutions.' The split will take effect on the 1st of next month. However, following the announcement of the spin-off, LS Electric’s stock price plunged, reflecting shareholder opposition. There is considerable backlash over concerns that shareholder value may be impaired after the spin-off. Recently, companies such as LG Chem/LG Energy Solution and SK Innovation/SK On have faced shareholder backlash after spinning off high-growth businesses. LS Electric has not yet disclosed specific plans for listing but many expect it to pursue an IPO.

There is also interest in what ESG enhancement measures major companies will present. They are expected to strengthen responses to climate change and the Serious Accidents Punishment Act. Earlier, APG, the largest pension fund in Europe based in the Netherlands, sent letters demanding carbon emission reductions to ten major Korean companies including Samsung Electronics, SK Hynix, LG Chem, LG Display, Lotte Chemical, POSCO Chemical, SK, LG Uplus, and SK Telecom. Since companies have pledged to provide sincere responses to shareholder inquiries, it is highly likely that proactive carbon emission reduction plans will be presented around this year’s regular shareholder meetings.

Regarding the Serious Accidents Punishment Act, industries with high risks of industrial accidents such as construction and heavy industry are expected to appoint safety management executives and reorganize their organizations accordingly. In particular, to distribute legal responsibility in the event of serious accidents, there is attention on whether major shareholders such as owners will step down from CEO or inside director positions, leading to changes in board composition.

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