by Ryu Hyunseok
Published 05 Apr.2024 08:20(KST)
Among the two companies that entrusted proxy voting this year, one was found to have done so in response to shareholder proposal agendas. Compared to last year, this has doubled, which is analyzed to be due to the increased frequency of shareholder activism leading to more cases being submitted to general meetings of shareholders and voting battles.
Locomotive, a proxy voting and IPR agency, announced on the 5th that, based on its analysis of the "Proxy Voting Results for Regular General Meetings of Listed Companies with December Fiscal Year-End," the rate of proxy voting requests related to shareholder proposals increased to 4 out of 8 companies, doubling compared to 2023.
Proxy voting collection activities were conducted for four companies involved in disputes and shareholder proposal issues: JB Financial Group (shareholder proposal dispute regarding the appointment of Align Partners' board members), Daol Investment & Securities (second largest shareholder proposal), Ubiquoss (minority shareholder coalition shareholder proposal followed by withdrawal), and Kangstem Biotech (minority shareholder coalition shareholder proposal). SK Securities had an issue regarding the appointment of audit committee members, and Polaris Group, Estec Pharma, L&K Bio, and Deokseong, which had issues related to amendments to articles of incorporation due to mergers and acquisitions (M&A), also conducted proxy voting collection activities. Locomotive stated that all eight companies achieved a target collection rate of over 97%.
Out of a total of 233,000 shareholders across the eight companies, proxy voting securing activities targeted 17,000 individuals. Over 500 personnel were mobilized nationwide during the month of March.
In particular, the required proxy voting rights for all eight companies ranged from 1.53% to 13.54% of issued shares, with an average additional proxy voting right requirement of 6.62%. Except for JB Financial Group, which recorded an 86.6% target achievement rate, the other seven companies achieved target collection rates of 102% to 111% or higher.
Lee Tae-sung, CEO of Locomotive, said, "Cases where activist private equity funds to minority shareholders make various demands on companies through general meetings of shareholders have surged, leading to an increase in proxy voting requests. Many cases have unclear addresses, and for companies with shareholder proposals or management disputes, the rejection rate of shareholders' proxy voting rights is also high. Therefore, success rates have increased as the process has evolved from simple shareholder visits and proxy form collection to a more complex approach including IR/PR."
According to Locomotive's analysis, in the shareholder residence verification stage for securing proxy voting rights, the proportion of non-residence and unverified cases exceeded half at 52.08%. In the subsequent proxy voting collection stage, only 2 out of 10 people handed over their proxy voting rights, slightly higher than the rejection proportion (1.5 people).
In cases involving management disputes or shareholder proposals, the rejection proportion increased to 2 out of 10, while approval dropped to 1.5 out of 10. This is due to the continued bearish stock market making it difficult to realize investment returns and strengthened coalition activities centered on minority shareholders.
Meanwhile, regarding the regional distribution of shareholders, the metropolitan area including Seoul, Gyeonggi, and Incheon accounted for an overwhelming 63.5%. Among them, Seoul and Gyeonggi regions made up 59.3%, representing the majority.
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