Juchong D-10 Kumho Petrochemical's 'Joka's Rebellion' Park Cheol-wan Repeatedly Claims "Lack of Shareholder Friendliness"

"Dividend and Treasury Stock Cancellation Insufficient" Criticism Again After Four Days
Kumho Petrochemical Stock Price at 150,000 Won... 30% Lost in One Year

Park Cheol-wan, former executive director, nephew of Park Chan-gu, chairman of Kumho Petrochemical, and the largest shareholder. (Photo by former executive director Park)

[Asia Economy Reporter Moon Chaeseok] As Kumho Petrochemical's shareholders' meeting approaches on the 10th, Park Cheolwan, former executive director and largest shareholder as well as nephew of Chairman Park Changu, has been repeatedly claiming that the company's shareholder-friendly policies are insufficient. He reiterated his previous claims that dividends and treasury stock cancellations are inadequate, causing the stock price to fall, just four days later.

On the 15th, Park released a press statement saying, "The reason the stock price remains in the 150,000 KRW range is due to the company's complacent dividend policy and insufficient treasury stock cancellation policy, so urgent measures are needed." He brought up similar arguments to the seven causes of small shareholder losses he announced four days ago, including the decline in dividend payout ratio and cancellation of only 0.56% of treasury stock. Kumho Petrochemical's closing price on the 14th was 151,500 KRW, down 29.2% from a year ago.

Park pointed out that "the company has not properly kept several promised shareholder-friendly policies," highlighting treasury stock cancellation and dividend increase policies as the most serious issues. According to him, Kumho Petrochemical's cancellation of only 0.56% of treasury stock at the end of last year is significantly lower than other companies. He also criticized the purchase of treasury stock worth 150 billion KRW less than three weeks before the shareholders' meeting. While agreeing with the treasury stock purchase, he said the purchase amount is insufficient, being only about 3% based on the current market price. Although the company promised to cancel all purchased shares, it has not disclosed a specific schedule. He also noted the problem that the company has not revealed how it plans to handle the existing 17.8% treasury stock holdings.

A more serious issue he pointed out was the treasury stock swap with OCI in December last year. The company claims to have secured friendly shares with OCI under the name of "business alliance" while implementing "shareholder-friendly policies" through treasury stock cancellation. However, the swapped treasury stock is converted into common stock, increasing the number of circulating shares, which actually reduces existing shareholders' voting rights and dividends per share. Park explained, "Because the company, which has weak management rights, is very likely to continue similar transactions like the OCI case, I was compelled to file a 'provisional injunction to prohibit voting rights exercise' with the court on the 11th of last month."

He also raised his voice that the company's dividend policy is "not shareholder-friendly at all." He claimed that the dividend payout ratio of 14% based on consolidated standards for the announced dividend of 10,000 KRW per share is even lower than last year's 19.9%. According to him, the company argues that due to the high volatility of its subsidiary Kumho P&B Chemical's (P&B) performance, it sets the dividend payout ratio based on separate standards to maintain a stable dividend payout ratio. In response, Park rebutted that P&B has financial stability, generating an average operating profit of 160 billion KRW annually over the past 10 years.

He also claimed that the company excludes subsidiary profits from dividend calculations due to investments such as acquiring the remaining 50% stake in Kumho Resort and Kumho Polychem. According to the company’s separate net profit basis, the profits of strong subsidiaries like P&B, Kumho Mitsui, and Polychem are excluded for last year. According to Park, these subsidiaries account for about 50% of net profit.

Furthermore, Park informed that the company has included on the agenda for the 45th regular shareholders' meeting scheduled for 9 a.m. on the 25th, shareholder proposals he sent, including ▲appointment of two outside directors ▲appointment of one audit committee member ▲approval of the 45th financial statements and profit distribution ▲approval of director remuneration limits. Proxy voting for Park’s side began on the same day.

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