JB Financial, KT&G brace for proxy fights at shareholders' meetings

The Korea Times

The Korea Times

Finance

Thu, November 30, 2023 | 06:46

Companies

JB Financial, KT&G brace for proxy fights at shareholders' meetings

Posted : 2023-03-26 16:18

Updated : 2023-03-27 15:02

JB Financial Group holds an annual shareholders' meeting at the headquarters of Jeonbuk Bank in March 29, 2019. Newsis

Minor shareholders' voices getting louder through proxy voting

By Anna J. Park

More than seven out of 10 listed Korean companies are set to hold annual shareholders' meetings throughout this week and market watchers are paying particular attention to JB Financial and KT&G, whose annual meetings are expected to become the settings of proxy fights initiated by activist funds.

JB Financial Group is facing a showdown in a proxy battle with Align Partners, a local activist fund, at its annual shareholders' meeting on Thursday. Align Partners is the financial giant's second-largest shareholder with a 14.04 percent stake.

As a key shareholder, the activist fund has been urging the group to increase dividends since early this year. Yet the group's shareholder return policy announced in early February, deciding to pay 715 won ($0.55) of dividend per share, failed to satisfy the activist fund's demand, prompting it to submit a shareholder proposal urging the group to pay 900 won in dividends per share.

JB Financial's board, as well as Samyang Corp., the largest shareholder of the group holding a 14.61 percent stake, are opposed to Align's demand to increase the dividend allocation for the sake of bolstering the financial group's capacity to absorb losses. Thus, the fate of the agenda is to be decided through a proxy contest at Thursday's shareholders' meeting.

While two representative global proxy voting advisors ― Institutional Shareholder Services (ISS) and Glass Lewis ― issued opinions in favor of JB Financial's side, it won't be an easy proxy battle to predict, as the gap between JB Financial stakes held by Samyang and Align Partners is only 0.57 percentage point.

KT&G's shareholders' meeting slated for Tuesday is also expected to witness a proxy fight among shareholders, as Singapore-headquartered activist fund Flashlight Capital Partners (FCP) initiated a set of shareholder proposals. The activist fund submitted a total of 10 proposals, including a share buyback, cash dividend allocation and recommendations of independent directors.

On a similar note, DB HiTek, Taekwang Industrial Co., and Namyang Dairies are facing proxy contests during their shareholders' meetings slated later this week, initiated by either by minor shareholders' associations or an activist fund.

According to the Korea Securities Depository (KSD), 1,839 companies, which constitute 73.2 percent of 2,509 listed corporations that settle accounts in December, will hold their annual shareholders' meetings from Monday to Friday. Out of 1,839 corporations, 445 are listed on the benchmark KOSPI, 1,247 companies listed on the tech-heavy Kosdaq market, while the remaining 120 companies are listed at the KONEX market, an acronym for the Korea New Exchange, which was established to support startups, as well as small and medium-sized (SMEs) businesses.

annajpark@koreatimes.co.kr