Korea Zinc Co.'s CEO, Yun B. Choi, has successfully maintained his position and control over the board, prevailing over the company's largest investor in a tense shareholder meeting. Young Poong Corp. and the private equity firm MBK Partners Ltd. aimed to appoint directors after gaining support equal to 41.3% ownership in the top zinc smelter globally. However, a strategic move by Korea Zinc prevented Young Poong from using its 25.4% stake in the vote.
Korea Zinc utilized an over-the-counter share acquisition via its Australian subsidiary to establish a cross-shareholding, effectively blocking Young Poong and leaving only MBK Partners with voting rights. A court ruling rejected Young Poong's plea to regain its full 41.3% voting share.
The shareholder meeting on Friday, which was delayed by three hours due to discussions on the latest developments, does not conclusively resolve the battle for control. It may signal a temporary ceasefire after six months of contentious disputes, as contenders Young Poong and MBKP review their strategies.
The conflict over Korea Zinc has been a significant examination of South Korea's corporate governance regime, shedding light on the nation's intricate ownership structures. The company, a crucial player in efforts to diversify critical raw material supply chains internationally, had the support of 35% of shareholders before the vote. The result underscores the impact of corporate defenses in boardroom disagreements in the country.
Shareholders at the meeting approved Korea Zinc's proposal to limit the board to 19 members, thwarting the Young Poong-MBK alliance's bid to expand their director roster. Five directors from the Korea Zinc faction were endorsed by investors, while three from the Young Poong-MBK alliance were appointed.
The board size restriction aligned with recommendations from proxy advisory firms like Institutional Shareholder Services Inc. and the Police Investigations and Review Commissioner, despite mixed opinions on individual director nominees. Glass Lewis, which had previously supported all Korea Zinc-nominated candidates, criticized the company's defensive actions, describing them as a tactic to consolidate management control at the expense of shareholder rights.