Confusion at Hanmi Pharm... Proxy Advisors' Opinions Differ Ahead of the General Meeting of Shareholders

KCGS 'Support for Shareholder Proposal', Glass Lewis 'Support for Hanmi Science'... ISS 'Neutral'

The regular shareholders' meeting of Hanmi Science, which will decide the integration between Hanmi Pharmaceutical Group and OCI Group, will be held on the 28th. A direct vote showdown is expected between the mother-daughter duo (Song Young-sook and Lim Ju-hyun) and the brothers (Lim Jong-yoon and Jong-hoon) within the Hanmi Pharmaceutical Group owners, while major domestic and international proxy advisory firms have issued conflicting opinions, plunging the situation into even greater uncertainty.

Hanmi Pharmaceutical Headquarters View
[Photo by Hanmi Pharmaceutical]

According to industry sources on the 20th, the global proxy advisory firm Glass Lewis announced that it recommends full approval for the six nominees proposed by the mother-daughter side and full rejection for the five nominees proposed by the brothers in relation to the director appointment agenda submitted to this shareholders' meeting. On the other hand, the domestic firm Korea ESG Standards Institute (KCGS) recommended full approval for the five nominees proposed by the brothers and full non-exercise of voting rights for the six nominees from the mother-daughter side. Another global proxy advisory firm, ISS, recommended approval for only three of the six nominees from the mother-daughter side and two of the five nominees from the brothers.

The side that wins the director appointment battle at this shareholders' meeting will control the board of directors of Hanmi Science, the holding company of Hanmi Pharmaceutical Group. If the brothers win, they can overturn the previous integration decision, and if the mother-daughter side maintains board dominance, the integration is expected to accelerate. This is considered a turning point for the integration, along with the soon-to-be-announced injunction against new share issuance at Hanmi Science.

In terms of Hanmi Science's shareholding structure, the mother-daughter side holds the advantage. The mother-daughter side owns 35.0%, while the brothers hold 28.4%. However, the brothers argue that the shares held by the Gahyeon Cultural Foundation and the Lim Seong-gi Foundation, which Chairman Song disclosed as special-related parties, should remain neutral since they inherited the shares from the late founder Lim Seong-gi. Additionally, the voting intentions of the largest individual shareholder Shin Dong-guk, chairman of Hanyang Precision (12.15%), the National Pension Service (7.09%), and minority shareholders will likely determine the outcome. Institutional investors and foreign investors, including the National Pension Service, are significantly influenced by proxy advisory firms' opinions.

According to Hanmi Science's articles of incorporation, the maximum number of directors that can be appointed is 10. Currently, there are four directors, including Song Young-sook, chairwoman of Hanmi Pharmaceutical Group, and outside directors Shin Yu-cheol, Kim Yu-cheol, and Kwak Tae-seon. Since no directors' terms are expiring this time, up to six seats are vacant.

The mother-daughter side proposed six nominees: Lim Ju-hyun, president of Hanmi Science, and Lee Woo-hyun, chairman of OCI Group, along with Choi In-young, head of Hanmi Pharmaceutical R&D Center (executive director) as non-executive directors; and Park Kyung-jin, professor at Myongji University Business School, Seo Jeong-mo, CEO of Monas Lab, and Kim Ha-il, professor at KAIST Graduate School of Medical Science as outside directors. The brothers proposed five nominees: themselves as two inside directors, Kwon Kyu-chan, CEO of DXVX as a non-executive director, and Bae Bo-kyung, professor at Korea University Business School, and lawyer Sa Bong-gwan as outside directors. There are six vacant seats but 11 candidates. If more than six director candidates receive a majority of votes, the top six by vote count will be appointed.

Notably, ISS took a somewhat neutral stance. ISS is known as a proxy advisory firm referenced by over 70% of global investors. ISS recommended approval for only three nominees from the mother-daughter side?Chairman Lee Woo-hyun, Professor Park Kyung-jin, and Professor Kim Ha-il?and only two nominees from the brothers?President Lim Jong-yoon and lawyer Sa Bong-gwan. ISS opposed President Lim Ju-hyun, Center Head Choi In-young, President Lim Jong-hoon, and CEO Kwon Kyu-chan. This is interpreted as balancing the board with one director each from Chairman Song and President Lim Jong-yoon according to the Hanmi Pharmaceutical Group owners' standards.

This contrasts with ISS's earlier stance, where it supported the inside director appointments of President Lim Ju-hyun and CEO Kim Nam-gyu of Ladepangs proposed at OCI Holdings' regular shareholders' meeting. However, if the board is appointed based on ISS's current recommendations, the existing four Hanmi Science directors would be classified as the mother-daughter side, meaning the mother-daughter side would still hold an overwhelming majority on the board.

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