Compliance rate with key corporate governance indicators... Korea Zinc meets 100%, Yeungpo at 60%

*This content was translated by AI.

The "corporate governance levels" of Korea Zinc and Yeungpo, which have been embroiled in a management rights dispute for three years, are showing a clear difference, drawing attention.

According to the 2025 corporate governance report disclosed on the 1st, Korea Zinc's compliance rate with key corporate governance indicators was recorded at 100%. This means that within one year, it has addressed all previously unmet items, achieving full compliance after being at 80% in August 2024. In contrast, Yeungpo recorded the same 60% as last year.

In 2024, Korea Zinc fulfilled all items that were not previously met: convening a notice for the shareholders' meeting four weeks in advance, holding the meeting outside of the designated concentration days, and providing predictability regarding cash dividends. In fact, the notice for the 52nd annual general meeting this year was issued 29 days before the meeting, and it expanded convenience for shareholders to exercise their voting rights by simultaneously implementing electronic voting and recommending proxy voting. It also enhanced information accessibility for foreign investors through English disclosures.

In terms of board composition and operations, an independent director serves as the chairperson, and independent directors make up more than half of the board. With four women and two foreign nationals serving as directors, the board's independence and diversity are also being recognized. Additionally, evaluations are conducted for the board, its committees, and individual directors, and the evaluation process, results, and improvement measures are made public. The company has also made efforts to enhance minority shareholder rights, such as introducing the cumulative voting system starting in 2025. These are all points that have received positive evaluations, according to Korea Zinc.

The dividend policy has also been improved in a market-friendly direction. Korea Zinc adopted a method where the board first determines the amount of cash dividends during the settlement dividend and quarterly dividend processes, and then sets the dividend record date. This was done to follow the improvement direction of the financial authorities, allowing investors to decide on investment after confirming the dividend amount.

In contrast, Yeungpo failed to meet six items: convening a notice for the shareholders' meeting four weeks in advance, holding the meeting outside of the designated concentration days, providing predictability regarding cash dividends, establishing and operating a CEO succession policy, adopting the cumulative voting system, and establishing a policy to prevent the appointment of executives responsible for damaging corporate valuation or infringing on shareholder rights. As a result, its compliance rate with key corporate governance indicators remained at 60%.

According to Yeungpo's corporate governance report, the board is composed of six members, including two inside directors and four outside directors, with outside directors forming the majority. While it emphasizes that an outside director serves as the chairperson, reports indicate that there are still significant areas requiring improvement when examining the actual operations.

First, no separate meetings attended only by outside directors were held throughout 2025. In contrast, Korea Zinc held four such meetings last year and continues to hold related meetings this year, creating a stark contrast.

Regarding the reason for not holding separate meetings attended only by outside directors, Yeungpo stated, "Since an environment has been created where the opinions of outside directors within the board are respected and their independence is guaranteed, we are not holding separate meetings composed solely of outside directors." It further added, "The atmosphere within the board has become one where members freely express their opinions during deliberations."

Unlike Korea Zinc, Yeungpo does not conduct individual evaluations of outside directors. In its corporate governance report, Yeungpo explained the reason as follows: "There is a concern that political situations may arise within the board if evaluations are conducted for the four outside directors out of the six board members, excluding the two inside directors."

However, a representative from the ESG industry pointed out, "Such an explanation is not easily accepted. It is rare to exclude outside director evaluations, which are used as a representative corporate governance tool to enhance the board's accountability and independence, on the grounds of 'concerns about political situations.'"

Yeungpo further added, "Continuous exchanges and adjustments regarding role division, attendance rates, accountability, and expertise within the board are already taking place, and major decisions are being made based on these. Therefore, we are withholding internal judgment on the introduction of external evaluation methods such as mutual evaluations."

However, individual evaluations of outside directors are generally recognized as an internal corporate governance mechanism to enhance the objectivity and accountability of board operations. Questions have been raised about expressing this as an "external evaluation method." Many in the ESG industry and other sectors also hold the view that there are limitations in verifying the roles and performance of outside directors through informal opinion exchanges alone.

Meanwhile, controversies surrounding Yeungpo's board operations and decision-making procedures were also raised in connection with the management cooperation agreement signed with MBK Partners. According to disclosures, in September 2024, Yeungpo, MBK Partners, and Jang Hyung-jin, a Yeungpo advisor, signed a management cooperation agreement prior to the public tender offer for Korea Zinc shares. Subsequently, some shareholders raised issues regarding the decision-making process related to Korea Zinc shares, which constitute a significant portion of Yeungpo's assets, and the appropriateness of the contract terms. This matter eventually led to Joo Ju (CEO) litigation.

At the time, some pointed out that major corporate decisions were made while two inside directors, who are also the CEO, were under arrest, and continued to question what discussion and review processes were followed for these decisions. In particular, as questions arose about whether the decision-making process regarding major management issues of the company went through sufficient discussion, verification, and checks, the issues of board independence and accountability are once again drawing attention.

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*This content was translated by AI.