Yeongpung and Korea Zinc Head to Shareholders' Meeting Vote Battle... "Oppose Dividend Policy"

Intensified Management Battle Over Cash Cow Korea Zinc
Korea Zinc Responds, "Set Considering Management Conditions"

Yeongpung Group has announced its intention to oppose the dividend plan and some amendments to the articles of incorporation proposed by its core affiliate, Korea Zinc, making a showdown between the Jang and Choi families, co-founders of the group, inevitable at the March shareholders' meeting.

Korea Zinc decided to put forward the reappointment of Jang Hyung-jin, an advisor to Yeongpung and a non-executive director, without objection, which was a major flashpoint between the two families. However, Yeongpung opposed other agenda items at the shareholders' meeting. The two families, who have been partners for 75 years, are intensifying their management battle over Korea Zinc, the largest affiliate. Korea Zinc accounts for more than 70% of Yeongpung Group's total sales.

Korea Zinc recently held a board meeting and decided to approve at the regular shareholders' meeting on the 19th of next month a year-end dividend of 5,000 KRW per share, as well as amendments to the articles of incorporation regarding stock acquisition rights and general public capital increase. Yeongpung Co., Ltd., the largest shareholder holding 25.28% of Korea Zinc's shares as of the end of last year, issued a statement on the 21st opposing these two agenda items, citing "serious infringement and damage to shareholder rights and interests."

Choi Yoon-beom, Chairman of Korea Zinc Photo by Korea Zinc

Yeongpung pointed out that despite Korea Zinc's sufficient financial capacity, the year-end dividend was reduced compared to the interim dividend of 10,000 KRW per share paid in June last year. Yeongpung stated, "When combining the year-end and interim dividends, the total cash dividend per share for 2023 is 15,000 KRW, which is 5,000 KRW less than the previous year," adding, "This may cause shareholders to feel uncertain about the company's future, risking further stock price decline, and it goes against the government's policy to increase dividends, so we express our opposition."

Yeongpung also argued that the proposed amendments to Article 17 (Stock Acquisition Rights) and Article 17-2 (General Public Capital Increase, etc.) of the articles of incorporation would damage the value of shares. Yeongpung said, "Revising the articles to lift restrictions on stock acquisition rights and allow arbitrary granting of these rights to third parties, including existing shareholders, goes against the interests of all shareholders," adding, "In some cases, it could benefit certain specific shareholders." Yeongpung also stated that the existing articles of incorporation "reflect the spirit of shareholder-centered management, which has been maintained with the full consent of major shareholders since the founding of Korea Zinc."

Korea Zinc responded regarding the dividend, saying, "The decision was made considering various factors such as the company's management situation and global economic outlook," and regarding the amendments to the articles of incorporation, stated, "They follow the standard articles of incorporation under the Commercial Act adopted by 97% of listed companies."

Jang Hyeong-jin, Advisor at Yeongpung
Photo by Yeongpung

Yeongpung Group was jointly founded in 1949 by the late Jang Byeong-hee and Choi Gi-ho. The Jang family has managed Yeongpung Group and its electronics affiliates, while the Choi family has overseen Korea Zinc, maintaining separate management. When Choi Yoon-beom, grandson of founder Choi Gi-ho, was promoted and inherited management rights in 2022, the possibility of affiliate separation arose, and competition over shares with the Jang family intensified around the same time.

Chairman Choi holds 1.75% of shares, but including friendly shares, his stake exceeds 33%. Yeongpung Group's stake was 32.27% as of the end of last year. At this shareholders' meeting, Korea Zinc plans to propose the reappointment of Chairman Choi as an inside director and Advisor Jang as a non-executive director.

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