Samsung C&T, Daol exert dominance over shareholder
Samsung C&T gained the upper hand against shareholder activists during its general meeting of shareholders Friday, in a tense standoff over whether dividends should be increased or not.
Also on Friday, Daol Investment & Securities successfully kept its most dominant retail investor from mobilizing smaller individual investors to vote for his proposals aimed at reducing management’s power at its shareholder gathering.
The two meetings took place as shareholders are becoming more vocal on management-related issues, in the month after the government introduced the Corporate Value-Up Program, a set of measures aimed at boosting undervalued stocks.
The program is aimed at improving corporate governance, which was regarded as a major reason for the typically lower valuations for listed companies in Korea compared to global peers.
However, at the same time, companies here are concerned that shareholders may take advantage of the program to make extreme demands.
In the case of Samsung C&T, five activist funds, including City of London Investment Management and Whitebox Advisors LLC, pressed the company to raise cash dividends and cancel treasury stocks.
In particular, they asked the firm to return its profits to shareholders through dividends and a share buyback program that would amount to some 1.2 trillion won ($900 million).
The requested dividends were far higher than the 2,550 won for common stocks and 2,600 won for preferred stocks offered by the company.
The proposal by the five activist funds won only 23 percent of shareholders’ votes, as compared to 77 percent of Samsung C&T’s proposal for dividends worth 417.3 billion won in total. The amount was a 10.9 percent increase from 2023.
A source familiar with the matter said that the result was widely anticipated, as the five activist funds’ combined stake in Samsung C&T is only 1.46 percent.
Samsung C&T said, “Fully accepting the five activist funds’ demand was unrealistic because we need to secure cash for future growth engines and also to enhance competence in current businesses.”
Concerning Daol Investment & Securities, only 26 percent of shareholders endorsed its largest retail shareholder, Kim Gi-soo, while the other 73 percent voted against or abstained.
Kim and his family combined are the second-largest shareholders in the company with a 14.34 percent stake, after Daol Investment & Securities CEO Lee Byeong-cheol who holds a 25.2 percent stake.
Kim came up with a total of 12 proposals. They included a demand to lower the annual salary for members of the board of directors to 3.8 billion won, against the 8 billion won proposed by management.
Kim also asked to exclude the largest shareholder from receiving dividends and overhaul regulations for the shareholders’ meeting, which he said is necessary for balance and to keep management in check.