Alline "Coway Concentrated Voting System 47% Approval → Rejected... Governance Improvement Support Confirmed"

Activist fund Align Partners (Align) announced on the 31st that the shareholder proposal to introduce a cumulative voting system at Coway's 36th regular general meeting of shareholders was rejected, stating, "Although it is regrettable that the proposal was rejected, the 46.5% approval rate confirmed the support of many shareholders who wish to improve Coway's governance."

On the same day, Lee Chang-hwan, CEO of Align, emphasized, "Since Align began shareholder engagement on December 26 last year, Coway has improved its shareholder return ratio from the previous 20% to 40% and accepted the introduction of the target capital structure policy, a key point in Align's shareholder letter, through the announcement of a corporate value enhancement plan."

He added, "Coway's stock price rose 25.4% from 67,800 KRW on the engagement start date to 85,000 KRW on the 28th of last month, significantly outperforming the KOSPI's 5.3% increase during the same period," and emphasized, "It is encouraging to see Coway's policies meaningfully improve following Align's campaign and the market responding accordingly."

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However, Align holds the position that enhancing the independence of Coway's board of directors and improving corporate governance are essential for the sustainable enhancement of Coway's shareholder value. CEO Lee pointed out, "Coway's current board is virtually composed entirely of Netmarble-affiliated personnel," and noted, "The interests of minority shareholders holding more than 70% of the shares are not adequately represented within the board."

He reiterated the necessity of introducing the cumulative voting system. He argued, "Since Netmarble became Coway's largest shareholder, various conflicts of interest have arisen between Netmarble and minority shareholders, such as a sharp decline in shareholder returns and related-party transactions like Hillaby and MBX coin investments, but Coway's board has failed to act as a check," and stated, "Unlike the existing winner-takes-all general voting system, the cumulative voting system allows shareholders to appoint directors proportional to their shareholding."

Regarding the target capital structure and shareholder return policies in Coway's 'Corporate Value Enhancement Plan' announced on February 13, 2025, Align expressed its intention to continuously demand improvements from management where there is room for enhancement. CEO Lee said, "Coway has set the target net debt to operating profit ratio at a 'maximum' of 2.5 times by 2027, but this is significantly lower than the median of 7.3 times for domestic peers and 5.4 times for global peers," and urged, "The target debt ratio should be presented annually as a 'goal,' not a 'maximum.'"

Align added, "Based on the results of this shareholder meeting, we will continue our efforts to enhance Coway's shareholder value, including persuading shareholders."

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