VIP Asset Management has urged Woldex to restructure its compensation system and develop plans to enhance corporate value after all proposals regarding director compensation were rejected at the extraordinary shareholders meeting.
On June 30, VIP Asset Management released a statement regarding the results of the Woldex extraordinary shareholders meeting held the previous day, saying, "Despite the major shareholder's separation of agenda items and exclusion of electronic voting, we received the support of shareholders. Now it is time for the company to respond to shareholders' demands."
All three proposals related to director compensation presented at the Woldex extraordinary shareholders meeting were rejected.
Notably, the second proposal, which aimed to set the compensation limit for directors excluding CEO Bae Jong-sik, was expected to pass due to Bae's 34.8% voting rights. However, it was ultimately defeated by a strong opposition from general shareholders, with 94.7% voting against it.
VIP Asset Management explained, "Institutional investors, including the Norwegian Sovereign Wealth Fund, and individual shareholders participated in exercising their voting rights, which led to the reversal of the outcome."
This voting contest marks the first time in VIP Asset Management's 23-year history that it has publicly solicited proxy votes. Previously, the firm sought to enhance corporate value through dialogue with management, but it publicly opposed this agenda due to concerns over potential damage to corporate value.
Woldex's management resubmitted agenda items that had been rejected at the last regular shareholders meeting without substantial modifications to address shareholders' concerns. They also faced criticism for holding the meeting on a weekday morning in Gumi, North Gyeongsang Province, and for not allowing electronic voting, which had been permitted during the regular meeting.
Concerns were heightened by the fact that the average dividend payout ratio over the past three years was only 2.3%, and three of the four inside directors are Bae and his two sons, raising questions about the independence of the board.
VIP Asset Management assessed Woldex's recently announced investment plan of 260 billion won and a projected average dividend payout ratio of 10% over the next three years as falling short of expectations in terms of specificity and shareholder returns. They argued that with approximately 230 billion won in cash assets and 160 billion won in operating cash flow generated over the past three years, Woldex could afford to provide more substantial returns to shareholders.
As a result, VIP Asset Management proposed a minimum of 20 billion won in share buybacks and cancellations this year, along with plans to allocate over 40% of net profits to shareholder returns starting next year. They also demanded that director compensation be linked to objective performance metrics such as total shareholder return (TSR).
Kim Min-guk, CEO of VIP Asset Management, stated, "Shareholders are raising issues not with the amount of compensation itself but with a compensation system that operates independently of performance. If the company engages in sincere negotiations, we will propose a reasonable value enhancement plan that encompasses shareholder returns, new investments, and the compensation system."
* This article has been translated by AI.
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