"Goryeo Zinc Shareholder Return Rate Twice That of Korea" "Want More"… Choi-Jang Conflict Intensifies

Co-founded Youngpoong Group, 75 Years of Partnership 'Shaken'
Share Competition Continues, Voting Battle Over Dividends

Korea Zinc has opposed the largest shareholder Youngpoong Co., Ltd.'s claim that "the 2023 dividends should be set at the same level as the previous year," calling it an "excessive demand." The conflict between the families of Youngpoong advisor Jang Hyung-jin and Korea Zinc Vice Chairman Choi Yoon-beom appears to be escalating.

On the 25th, Korea Zinc issued a press release stating, "As the government is scheduled to announce the 'Corporate Value-Up Program' on the 26th, there are conflicting claims between Youngpoong and us regarding shareholder returns," adding, "Korea Zinc already has a high shareholder return ratio of 76.3%, but Youngpoong is demanding an excessive shareholder return ratio approaching 96%."

Regarding Youngpoong's claim that "the year-end dividend should be increased to the same level as the previous year to protect shareholder interests," Korea Zinc pointed out, "This is not for Korea Zinc shareholders but for the Youngpoong management, who cannot escape a chronic deficit structure without Korea Zinc's dividends."

Korea Zinc stated, "The total dividend amount of Korea Zinc increased every year from 176.7 billion KRW in 2018 to 397.3 billion KRW in 2022," and "The dividend payout ratio (dividends as a percentage of net income) has also steadily increased based on consolidated net income." Despite the COVID-19 pandemic and high-interest-rate environment, both dividends and payout ratios have increased over the past five years.

Korea Zinc also announced a 100 billion KRW share buyback and cancellation last year. The total shareholder return amount, combining dividends and share cancellations, was 402.7 billion KRW, which translates to a shareholder return ratio of 76.3%.

Quoting KB Securities data, Korea Zinc said, "The average shareholder return ratio in Korea over the 10 years from 2013 to 2022 was about 29%," adding, "Considering this, Korea Zinc's shareholder return ratio is more than twice the Korean average."

Choi Yoon-beom, Vice Chairman of Korea Zinc (left), Jang Hyung-jin, Advisor of Youngpoong [Photo by Korea Zinc, Youngpoong]

On the 23rd, Korea Zinc also issued a press release stating, "Youngpoong's claim of 'damage to shareholder value' is groundless." Korea Zinc said, "Last year's shareholder return ratio (76.3%) was much higher than the previous year's 50.9%," and "The return amount also increased from 397.9 billion KRW in 2022 to 402.7 billion KRW last year."

It continued, "Youngpoong, whose shareholder return ratio is less than 5%, demands a shareholder return ratio approaching 96% from Korea Zinc under the pretext of protecting shareholder interests," adding, "When a company uses all its profits for shareholder returns instead of investing or improving the business environment, it lowers corporate value and shareholder interests in the long term." It also pointed out, "Youngpoong has never conducted share cancellations, so its total shareholder return ratio averages about 10% over five years," and "The most recent shareholder return ratio in 2022 was only 4.68%."

Korea Zinc claimed that Youngpoong has posted operating losses every year for the past five years, with a cumulative deficit of 137.1 billion KRW, while the dividends received from Korea Zinc over the past five years totaled 357.6 billion KRW. Korea Zinc stated, "Youngpoong has not earned any profit from its core business in five years," and "Youngpoong's net income turned to a substantial profit of 220.5 billion KRW solely from dividends received from Korea Zinc."

Dividend Trends of Korea Zinc Over the Past 5 Years [Image Source=Korea Zinc]

Earlier, on the 21st, Youngpoong issued a statement regarding the agenda items of Korea Zinc's 50th regular general meeting of shareholders, saying, "To protect the rights and interests of all shareholders, we oppose the dividend policy and some amendments to the articles of incorporation," signaling a showdown at the shareholders' meeting. Youngpoong argued, "Despite Korea Zinc's sufficient financial capacity, the year-end dividend (5,000 KRW per share) was reduced compared to the interim dividend (10,000 KRW per share) paid in June last year," and "This goes against the government's policy to expand dividends."

The Youngpoong Group was jointly founded in 1949 by the late founders Jang Byung-hee and Choi Ki-ho. The Jang family has managed the holding company Youngpoong Group and its electronics affiliates, while the Choi family has managed Korea Zinc separately. When Choi Yoon-beom, grandson of founder Choi Ki-ho, was promoted and inherited management rights in 2022, the possibility of separating the affiliates arose, and at the same time, the shareholding competition with the Jang family intensified. Although Chairman Choi's stake is 1.75%, including friendly shares, it exceeds 33%. As of the end of last year, Youngpoong Group's stake was 32.27%.

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