Glass Lewis Aligns with Korea Zinc’s Leadership, Backing Cumulative Voting and Board Size Cap

Glass Lewis, a leading global proxy advisory firm based in the United States, has expressed its full support for the provisions proposed by Korea Zinc (KRX:010130) for the upcoming extraordinary general meeting (EGM) amidst the ongoing management dispute with the MBK-Young Poong consortium. The firm has recommended shareholders endorse the board’s key proposals, including the adoption of a cumulative voting system and setting an upper limit on the number of board directors, while opposing all 14 candidates nominated by MBK-Young Poong due to doubts about whether their interests align with those of Korea Zinc’s shareholders.

Glass Lewis positively assessed Korea Zinc’s financial and management performance, noting its strong performance compared to industry peers over the past few years under the leadership of Chairman Yun B. Choi. The firm highlighted that the MBK-Young Poong consortium had not provided sufficient justification for board overhaul, raising questions about Young Poong’s governance track record and alignment of its interests to the broader interests of Korea Zinc’s unaffiliated shareholders.

The report also emphasized the benefits of cumulative voting, which it described as a tool to enhance shareholder representation and accountability. Glass Lewis recommended that investors approve this resolution, stating, “This mechanism can foster the creation of boards that are more representative of the broader shareholder base rather than disproportionately favoring controlling shareholders.” It went on to state, “While cumulative voting could introduce some degree of strategic maneuvering, such as tactical nomination strategies, we ultimately believe that the benefits of enhancing shareholder representation and accountability outweigh these risks in this case.”

Additionally, it supported setting an upper limit of 19 board members, citing concerns about governance inefficiencies if the board were to expand to as many as 33 members.

In its recommendations, Glass Lewis advised voting for all seven candidates nominated by the board but proposed a strategic approach to support only four candidates under a cumulative voting system to avoid vote dispersion. If cumulative voting is not adopted, the firm recommends supporting all seven nominees and rejecting all 14 candidates proposed by the MBK-Young Poong consortium.

The Glass Lewis report joins a growing support from both local and international proxy advisory firms for the board’s proposals. Institutional Shareholder Services group of companies (ISS), another global advisory firm, acknowledged Korea Zinc as a technological leader in global zinc production and recommended partial support – 4 out of the consortium’s 14 nominees – while endorsing the current board’s diversity. Meanwhile, local firms SUSTINVEST and Korea ESG Rating have also endorsed cumulative voting, emphasizing its role in protecting minority shareholders and broader shareholder interests.

Glass Lewis’ agenda analysis report, released on January 14, 2025, also recommended supporting amendments to the articles of incorporation proposed by Korea Zinc’s board, including measures to enhance governance, such as setting an upper limit on board directors, executing a stock split, appointing an outside director as board chair, adding protections for minority shareholders, introducing quarterly dividends, and adjusting the dividend record date.

The recommendations from Glass Lewis and others highlight the critical stakes of the upcoming EGM. Approval of the board’s proposals on January 23, 2025 would significantly weaken the consortium’s efforts to gain control of the board and halt its hostile takeover bid.

A spokesperson for Korea Zinc remarked, “The alignment of global and local advisory firms with the current leadership underscores the importance of stability and strategic continuity for Korea Zinc. The consortium should take these recommendations into account and work constructively toward the long-term growth and value creation of the company.”

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