Why activist investors remain quiet ahead of shareholders' meetings this year

Samsung C&T's general meeting takes place at its headquarters in southern Seoul, March 15, 2024. The company was one of the listed firms targeted by activist shareholders last year. Courtesy of Samsung C&T

Activist shareholders have been rarely visible ahead of the shareholders' meetings of listed companies later this month, a stark contrast to their active public relations activities in the past few years, industry officials said Tuesday.

The improved policies on returns from the publicly traded firms are behind activist shareholders being quiet this year, they said.

The officials also said activist shareholders, many of whom are global hedge funds, cited low shareholder returns as they sought to woo a larger pool of retail investors to vote against the management side at the general meetings.

Kiwoom Securities data showed that a total of 20 cases addressed by activist shareholders at 2024 general meetings were related to shareholder returns. The number marked a steady increase from three in 2014 to nine in 2022 and 21 in 2023.

As a result, listed companies have been introducing measures for higher shareholder returns under the government’s Corporate Value-up Program aimed at boosting undervalued domestic stocks.

The program was adopted in February 2024, followed by more concrete directives and guidelines later in the year.

A screen shows the board of directors and other participants of Kumho Petrochemical's general meeting at its headquarters in central Seoul, March 22, 2024. Yonhap

“Shareholder activism is not likely to draw attention as much as it did in previous years, as the listed companies have been rushing to ensure higher return on investments,” said Jung Eui-jung, head of the Korean Stockholders’ Alliance.

A retired analyst, who asked to be identified by only his last name, Park, voiced a similar view.

He said Samsung C&T, KT&G, Kumho Petrochemical and other companies that were targeted by activist investors in 2024 did not receive any noticeable proposals concerning their shareholders' meetings so far this year.

A shareholder who holds more than 3 percent of a company’s stakes has the right to submit proposals for agenda items in writing at least six weeks before a general meeting.

The 2024 general meetings are mainly scheduled in late March, meaning the deadline for submitting proposals passed in mid-February.

“The activist shareholders are anticipated to keep low-key and instead to pay attention to policy direction on shareholder returns from corresponding companies,” Park said.

But he stressed that “the anticipated mood for this year’s general meeting should not be misinterpreted as if shareholder activism is losing ground in Korea."

“The activist shareholders are believed to be making a wait-and-see-approach concerning shareholder return policies for this year, and they will be vocal if the policies turn out to be less effective than they think in the mid- to long-term,” he added.

The market observers speculated that the listed companies are expected to lay out their plan this year to bring higher returns for investors.

Samsung Electronics plans to retire its own shares worth approximately 3.04 trillion won ($2.08 billion). Additionally, it plans to repurchase extra shares worth 3 trillion won.

Hyundai Motor plans to cancel about 4 trillion won worth of its own shares over the next three years.

POSCO Holdings is pushing to retire 2 percent of its treasury stocks. Kumho Petrochemical is geared toward implementing dividend payments and share buybacks with the goal of achieving a shareholder return rate of more than 40 percent by 2026.

Celltrion is planning to buy back 100 billion won worth of its own shares and push ahead with its plan for higher stock dividends.

HD Hyundai Heavy Industries, after a no-dividend policy for several years, is set to approve a cash dividend of 5,100 won per share.

Meanwhile, the appointment of outside directors with expertise is expected to draw shareholders’ attention at the general meetings in relation to transparency in corporate governance.

Such transparency is highlighted in the Corporate Value-up Program, especially as outside directors have been criticized for merely serving as rubber stamps throughout the corporate world.