Proxy Adviser Backs Korea Zinc’s Director Nominees, Opposes MBK-Young Poong Stock Split
Institutional Shareholder Services (ISS), a leading global proxy advisory firm, has recommended that Korea Zinc shareholders support the incumbent board’s proposed slate of five director nominees at the upcoming annual general meeting. This endorsement comes amid an ongoing dispute between Korea Zinc and its major shareholder, Young Poong, alongside private equity firm MBK Partners.
The ISS recommendation precedes the March 24 shareholder meeting, where investors in the world’s largest zinc smelter will cast their votes on competing board nominations from Chairman Choi Yun-beom and the Young Poong-MBK alliance.
In its “ISS Proxy Analysis & Benchmark Policy Voting Recommendations” report, released Monday, ISS advised shareholders to approve the appointment of the five directors nominated by Korea Zinc’s board.
ISS cited the revised Commercial Act, slated to take effect in September, which mandates the election of two separately elected audit committee members. The advisory firm noted that conducting the audit committee member election as an independent agenda item allows minority shareholders to scrutinize the qualifications and expertise of candidates more effectively.
For other agenda items, ISS generally aligned with Korea Zinc’s proposals, including the conversion of 917.6 billion won ($621.34 million) in legal reserves into retained earnings, the adoption of measures to strengthen minority shareholder protection, the introduction of electronic shareholder meetings, and amendments to the articles of incorporation to permit quarterly dividends and reinforce directors’ fiduciary duties.
However, ISS advised shareholders to reject a stock split proposal submitted by MBK Partners and Young Poong.
Board Composition at the Forefront
The upcoming annual meeting is poised to be a pivotal moment in the protracted battle between Korea Zinc and the Young Poong-MBK alliance.
The Young Poong-MBK alliance, controlling approximately 46% of Korea Zinc’s shares, has challenged Chairman Choi’s authority since launching a tender offer in September 2024.
While Chairman Choi’s camp appeared to gain an advantage at last year’s shareholder meeting, the vote failed to definitively resolve the control dispute, leaving tensions largely unresolved.
The central focus of this year’s meeting is the composition of Korea Zinc’s board.
Currently, the board comprises 19 seats, with 15 directors actively serving after the suspension of four members. Of these, 11 are aligned with Chairman Choi, while four are associated with the Young Poong-MBK alliance.
The terms of six directors, including Chairman Choi and Young Poong adviser Chang Hyung-jin, will expire at the upcoming meeting.
Chang, son of the late Young Poong co-founder Chang Byung-hee, is set to retire from Korea Zinc’s board after serving as a registered director since 1992.
His departure after 32 years signifies a major shift. For decades, Korea Zinc and Young Poong operated under a shared governance framework, with the Chang family managing Young Poong and its electronics subsidiaries, while the Choi family oversaw Korea Zinc. Chang’s exit, having served as a crucial link between the two families since the early 1990s, marks the unraveling of this long-standing arrangement amid the ongoing control battle.
The two sides have proposed differing strategies for filling the board vacancies.
Chairman Choi’s camp suggests filling only five of the six seats, allowing for the future appointment of additional directors to serve on the audit committee under the new legal framework.
Conversely, the Young Poong-MBK faction proposes filling all six seats, aiming to secure at least two or three seats and shift the balance of influence on the board.
Regarding board appointments, ISS recommended voting in favor of nominees Hwang Duk-nam, the board’s chair, and Walter Field McLallen, backed by Crucible JV, a joint venture between Korea Zinc and the US government tied to its planned US smelter. It also endorsed Park Byung-wook, Choi Byung-il and Lee Sun-sook, who were nominated by the Young Poong-MBK side, and recommended approval of Lee Min-ho as a separately elected audit committee member.
However, ISS recommended voting against the reappointment of Korea Zinc Chair Choi as an internal director.
ISS clarified that recommending a particular combination of candidates should not be interpreted as a reflection on the suitability of other nominees, but rather that the recommended group would most likely produce the most effective governance outcome.
The outcome of the vote is anticipated to reshape the company’s governance structure and future direction, according to observers. As the battle intensifies, both camps are actively seeking support from institutional investors, with additional proxy adviser recommendations expected in the coming days.
sahn
