ISS and Glass Lewis Also Oppose "Cha Partners Proposal"... Side with Kumho Petrochemical

"Shareholder Proposal Does Not Align with Company and Shareholder Interests"

Following the global proxy advisory firm ISS, Glass Lewis also sided with Kumho Petrochemical ahead of the vote at the upcoming shareholders' meeting on the 22nd. Glass Lewis opposed the shareholder proposal submitted by Cha Partners Asset Management, to whom former Kumho Petrochemical Executive Director Park Cheol-wan had delegated his rights.

In a report released on the 12th, Glass Lewis stated, "After reviewing the shareholder proposal, we have determined that it does not align with the interests of the company and its shareholders," adding, "The board of directors has no record of issuing treasury shares with the intent to harm shareholders." Furthermore, it noted, "The company has not used treasury shares defensively, and the exchange of treasury shares under the OCI joint venture agreement represents a relatively small portion of the company's issued shares."

Glass Lewis also said, "In recent years, there has been a significant level of director turnover at the board level, and the board has announced plans to cancel 50% of treasury shares over the next three years, which appears to address the concerns and potential risks raised by the shareholder proposer," recommending a vote against the shareholder proposal.

Glass Lewis is considered one of the two major global proxy advisory firms alongside ISS. It provides voting advisory services to over 1,300 institutional investors, including national pension funds, influencing shareholder decisions both domestically and internationally.

Kumho Petrochemical Headquarters, Jung-gu, Seoul [Photo by Kumho Petrochemical]

ISS also recently issued a report opposing all shareholder proposals submitted by Cha Partners and supporting all agenda items proposed by the Kumho Petrochemical board. ISS stated, "(The shareholder proposer) has not provided sufficient evidence to prove that treasury shares were or will be used to strengthen control." Both ISS and Glass Lewis opposed the shareholder proposal to appoint Kim Kyung-ho, Chairman of the KB Financial Group board, as an outside director and audit committee member.

Cha Partners requested a reconsideration of ISS's recommendation to oppose the shareholder proposal. Cha Partners argued, "ISS did not have time to review the detailed materials submitted by Cha Partners after March 6, and therefore based its opposition recommendation on the company's claims."

Cha Partners submitted shareholder proposals to amend the articles of incorporation to allow the cancellation of treasury shares by shareholders' resolution and to cancel all treasury shares currently held.

Former Executive Director Park, the largest individual shareholder, is the nephew of Park Chan-gu, Chairman of the Kumho Petrochemical Group. He clashed with Chairman Park's faction at the 2021 and 2022 shareholders' meetings. Last year, when Kumho Petrochemical Group and OCI Group established a joint venture and exchanged treasury shares worth 31.5 billion KRW, Park claimed it was for the purpose of defending management rights and filed a lawsuit to invalidate the disposal of treasury shares but lost the case.

Kumho Petrochemical stated, "We welcome the reports from the two major proxy advisory firms supporting all proposals put forth by the company's board," adding, "Having gained recognition for the stability of management and the independence of the board through the company's shareholders' meeting agenda, we will continue to strive to enhance shareholder value."

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