Key Proposals:
- Appointment of a Temporary Chair
- Full Cancellation of Treasury Shares
- Cash Dividend of KRW 7,500 per Common Share & Reclassification of Discretionary Reserves
- Election of Up to 17 Directors
SEOUL, South Korea, Feb. 20, 2025 /PRNewswire/ -- MBK Partners and Young Poong, the largest shareholders of Korea Zinc, have formally submitted a set of shareholder proposals ahead of the company's upcoming annual general meeting (AGM) in March. The proposals address key governance and shareholder return measures, including (i) appointing a temporary chair, (ii) canceling all treasury shares, (iii) distributing a cash dividend of KRW 7,500 per common share, (iv) reclassifying discretionary reserves to retained earnings, and (v) electing between 5 and 17 directors, significantly expanding the board. The first proposal put forward by Youngpoong-MBK Partners is the appointment of a temporary chair.
Strengthening Governance: Call for a Temporary Chair and Treasury Share Cancellation
MBK Partners-Young Poong's proposal for a temporary chair is rooted in governance concerns following the disruption of Korea Zinc's extraordinary general meeting (EGM) on January 23.
The cancellation of treasury shares has also been prioritized. Despite previous public commitments by Korea Zinc Chairman Choi Yun Beom to cancel treasury shares, the company has yet to execute the cancellation of over 12% of its shares, more than three months after the expiration of the mandatory tender offer period.
A spokesperson for MBK Partners-Young Poong stated, "There is a significant risk that treasury shares will be disposed of rather than canceled. The failure to honor public and legal commitments to cancel these shares could result in their sale to friendly shareholders or use for selective interests, ultimately eroding shareholder value and undermining Korea Zinc's corporate governance."
Enhancing Shareholder Returns: Dividend Proposal and Financial Transparency
As part of its commitment to consistent shareholder returns, MBK Partners-Young Poong has proposed a cash dividend of KRW 7,500 per common share for the 51st fiscal year. Including the interim dividend, the total payout would amount to KRW 17,500 per share-below the KRW 20,000 per share paid in the 49th fiscal year. Given that Korea Zinc's earnings through Q3 2023 exceeded the previous year's performance, the proposed dividend is expected to fall short of the payout ratio for the 50th fiscal year.
Concerns regarding financial transparency have also been raised. On February 5, the day after the shareholder proposals were submitted, Korea Zinc disclosed preliminary earnings, reporting a 15.6% year-over-year increase in operating profit for 2024 but a 22.1% decline in net profit due to a fourth-quarter loss. The announcement cited non-operating losses of KRW 200-300 billion, a figure MBK Partners-Young Poong considers inconsistent with operational performance. The shareholders plan to request further clarification on this discrepancy.
Board Restructuring Proposal: Conditional Expansion to Up to 17 Directors
MBK Partners and Young Poong have proposed the appointment of new directors to establish an independent and professional board at Korea Zinc. The number of director appointments will be conditional on the outcome of the ongoing injunction case regarding the suspension of resolutions passed at the extraordinary general meeting (EGM).
If both Agenda 1-1 (cumulative voting) and Agenda 1-2 (board size cap of 19 directors) are suspended, MBK Partners and Young Poong propose appointing a total of 14 directors, including five replacements for outgoing directors and nine additional new directors. The proposed candidates are:
- Non-executive Directors: Sung-du Kang, Kwang-il Kim
- Independent Directors: Kwang-seok Kwon, Myung-jun Kim, Soo-jin Kim, Yong-jin Kim, Jae-sub Kim, Hyun-chul Byun, Ho-sang Son, Seok-heon Yoon, Deuk-hong Lee, Chang-hwa Jung, Jun-beom Chun, Ik-tae Hong
If the injunction suspends only Agenda 1-2 (board size cap of 19 directors) while maintaining the validity of Agenda 1-1 (cumulative voting), MBK Partners and Young Poong propose appointing 17 directors. The proposed candidates in this case are:
- Non-executive Directors: Sung-du Kang, Kwang-il Kim, Jung-hwan Kim, Young-ho Cho
- Independent Directors: Kwang-seok Kwon, Myung-jun Kim, Soo-jin Kim, Yong-jin Kim, Jae-sub Kim, Hyun-chul Byun, Ho-sang Son, Seok-heon Yoon, Deuk-hong Lee, Chang-hwa Jung, Jun-beom Chun, Ik-tae Hong, Tae-sung Kim
If both Agenda 1-1 (cumulative voting) and Agenda 1-2 (board size cap of 19 directors) remain in effect, MBK Partners and Young Poong propose appointing five directors to replace those whose terms have expired. The proposed candidates are:
- Non-executive Directors: Jung-hwan Kim, Young-ho Cho
- Independent Directors: Tae-sung Kim, Yong-ho Shin, Chul-ki Kim
A representative from MBK Partners-Young Poong emphasized, "As the largest shareholder, we are committed to restoring governance integrity and protecting shareholder interests. We aim to establish an independent, professional board that will enhance both corporate and shareholder value."
Commitment to Restoring Corporate Integrity
MBK Partners-Young Poong's shareholder proposals reflect a broader effort to improve corporate governance, financial transparency, and shareholder value at Korea Zinc. As the AGM approaches, the shareholders reaffirm their commitment to ensuring a fair, independent, and shareholder-aligned board composition while advocating for transparent financial management and responsible capital allocation.
Contact
Seikyu Hong
sk.hong@mbkpartnerslp.com
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