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ISS recommends opposing Korea Zinc chairman's reappointment
Korea Zinc Chairman Choi Yun-beom delivers a presentation during a session on critical minerals supply chains at the International Energy Agency Ministerial Meeting in Paris, Feb. 18. Courtesy of Korea Zinc
By Jun Ji-hye
The world’s largest proxy advisory firm, the Institutional Shareholder Services (ISS), has advised shareholders to oppose the reappointment of Korea Zinc Chairman Choi Yun-beom as an inside director ahead of the zinc smelter’s annual shareholders’ meeting scheduled for March 24.
According to the ISS’ proxy analysis report issued Monday, the upcoming meeting should be viewed not simply as a contest over management control but as a broader attempt to address “repeated distortions in corporate governance and failures of oversight.”
While acknowledging that Korea Zinc has improved operating results and share price appreciation in recent years, the ISS stressed that the key issue confronting the company is governance rather than financial performance.
The advisory firm pointed to several developments as sources of concern surrounding Korea Zinc under the current leadership, including its attempt to pursue a discounted capital increase after conducting share buybacks at elevated prices.
The ISS also cited controversy over the restriction of Young Poong’s voting rights through cross-shareholding arrangements alleged to be unlawful, as well as questions about the adequacy of board-level deliberation during major strategic investment decisions.
The ISS ultimately determined that these actions suggest the company’s capital and ownership structure were used as tools to defend Choi’s control.
Choi has been locked in a management control battle with the alliance of Young Poong and MBK Partners since the latter launched a tender offer on Sept. 13, 2024.
The ISS also took issue with Korea Zinc’s retirement benefit policy. The report noted that honorary chairmen who are not registered directors — and therefore carry no statutory responsibility — are eligible for retirement benefits calculated at four times the multiple applied to representative directors.
The ISS recommended that shareholders approve amendments to the relevant provisions.
In addition, the report pointed out that the two honorary chairmen are relatives of Choi and argued that the level of compensation granted to them appears difficult to justify under widely accepted global governance norms.
Responding to the company’s claim that such arrangement had previously received shareholder approval, the ISS said that prior approval alone does not necessarily validate the appropriateness of the structure.
Market observers say the ISS’ recommendation signals that global institutional investors are increasingly recognizing structural governance concerns surrounding the current leadership of the world’s largest zinc smelting firm.
“Global investors view Korea Zinc’s challenges not as a matter of performance, but as structural governance deficiencies," an investment banking industry source said. "The upcoming shareholders’ meeting will serve as a critical inflection point in determining whether Choi’s leadership can transition toward internationally accepted governance norms or continue to maintain the existing control structure.”