ISS backs Kumho Petrochem in family feud-triggered proxy war

Proxy advisory firm International Shareholder Services (ISS) has expressed its support for all of Kumho Petrochemical Co.'s proposals up for vote at the company's shareholder meeting as the South Korean company faces a proxy battle with an activist fund acting on behalf of its former executive and cousin of Chairman Park Jun-kyung.

In a recent private report, ISS backed Kumho’s suggestion of retiring 50% of its treasury shares over the next three years, starting on March 20, dismissing Seoul-based Tcha Partners Asset Management’s demand that Kumho cancel all its treasury shares.

The shares Kumho proposed to offload through 2026 are worth 351 billion won ($270 million) based on its closing price on Tuesday.

ISS is also siding with Kumho on its candidate for an in-house director-cum-audit commissioner, the other issue Kumho and Tcha Partners are at odds with. The activist fund recommends another candidate.

Shareholders will cast a vote on those proposals at the company’s annual general meeting (AGM) on March 22.

Last month, Kumho’s former senior vice president and largest shareholder Park Chul-whan entrusted his shareholder rights, or a 9.10% stake, to Tcha Partners to launch a proxy fight against Chairman Park Jun-kyung, the eldest son of former head Park Chan-koo.

The latest move by the nephew of the former chairman is speculated as a fresh attempt to challenge his uncle and cousin for management control of the petrochemical company.

In 2021, he was removed from his position as senior vice president in charge of the company’s overseas synthetic rubber sales after his attempt to be promoted to executive director failed at the AGM the same year.

A Kumho official said ISS’ backing of the company's proposals supports the independence of its board of directors.

However, Tscha Partners argued that ISS has not had enough time to review the detailed documents it submitted after Kumho’s proposals, requesting the proxy advisor to look over its suggestions in an objective manner.

The activist fund owns 0.03% of the petrochemical company.

The National Pension Service, the second-largest shareholder of Kumho Petrochemical with a 9.3% stake, is deemed to hold a casting vote.

Write to Sang-Hoon Sung and Hyung-Kyu Kim at uphoon@hankyung.com
 

Yeonhee Kim edited this article.