Sustainable Best Opposes MBK and Yeungpo Side's Recommendation of Park Yu-kyung as Candidate... "Maintaining Current Management System More Aligned with Long-Term Interests of All Shareholders"

*This content was translated by AI.

Sustainable Best, a leading domestic institutional investor specializing in proxy advisory services, announced its opposition to Park Yu-kyung, the independent director candidate recommended by the MBK and Yeungpo side for the upcoming special shareholders' meeting of Korea Zinc scheduled for next month on the 9th.

In contrast, it recommended approval for Baek In-gyu, the candidate recommended by Korea Zinc itself, citing his superior expertise in accounting, auditing, and corporate governance.

On the 20th, Sustainable Best issued an analysis of the agenda items for the special shareholders' meeting of Korea Zinc scheduled for September 9, along with a report on voting recommendations.

It recommended approval for all agenda items, including the proposal to amend the articles of incorporation to expand the number of independent directors elected separately and the proposal to appoint four directors through cumulative voting. The independent director candidates include Lee Hyung-gyu and Seo Eun-sook, recommended by the company side, and Lee Joon-bong and Im Hye-seop, nominated by shareholders, totaling four individuals.

Regarding the key agenda item of this special shareholders' meeting—the appointment of an independent director to serve as a member of the audit committee—Sustainable Best recommended approval for Baek In-gyu, the candidate recommended by the company side, and opposition to Park Yu-kyung, the candidate recommended by MBK Partners (MBK) and Yeungpo.

According to the report, Sustainable Best explained that it evaluated not only the individual qualifications of the two independent director candidates for the audit committee but also which candidate's appointment would better align with the medium-to-long-term interests of all shareholders.

Evaluation criteria included: (1) the possibility of independent monitoring and supervision as an audit committee member; (2) expertise in accounting, auditing, and corporate governance; and (3) the impact of the overall composition of the board of directors and the ongoing dispute over control rights on medium-to-long-term shareholder value.

Regarding its recommendation to approve Baek In-gyu, the candidate recommended by the company side, the report stated that he possesses extensive experience in accounting, auditing, and corporate advisory services at Deloitte KPMG as a certified public accountant, demonstrating direct expertise relevant to core audit committee functions such as financial reporting, accounting treatment, internal controls, and external audits.

In contrast, regarding Park Yu-kyung, the report noted: "While she holds professional expertise and experience in responsible investment and corporate governance, given recent violations of accounting standards by the company and related sanctions concerning the internal control system for financial reporting, the importance of supervisory capabilities in accounting, auditing, and internal controls is particularly high. Therefore, from the perspective of direct relevance to audit committee duties, Baek In-gyu's expertise is judged to be relatively higher."

Furthermore, regarding the independence of audit committee members, Sustainable Best stated: "It is necessary for audit committee members to independently evaluate not only management's execution of duties but also major decisions related to disputes over control rights and matters involving conflicts of interest from the perspective of all shareholders. Therefore, audit committee candidates are required to perform their duties independently not only from current management but also from MBK-Yeungpo, the controlling shareholder. It is difficult to judge the degree of independence from the viewpoint of ordinary shareholders solely based on whether a candidate was recommended by the company or nominated by shareholders."

Additionally, Sustainable Best stated: "We further considered the impact of the overall composition of the board of directors following the appointment of candidates and the current dispute over control rights on the medium-to-long-term interests of the company and all shareholders. At this point, if control rights were to shift to the MBK-Yeungpo side, we judged that the continuity of existing management strategies would weaken, and the uncertainty in executing large-scale facility investments and key strategic projects would increase relatively more as a significant risk factor."

In particular, the non-ferrous metal smelting industry is characterized by large-scale facility investments, long-term investment recovery periods, compliance with environmental and safety regulations, and the requirement for a high level of industrial expertise. Sustainable Best noted that management capabilities capable of stably executing medium-to-long-term strategies significantly influence corporate valuation. It concluded that maintaining the continuity of the current management system while stably advancing medium-to-long-term management strategies is relatively more aligned with the long-term interests of all shareholders.

In contrast, MBK Partners, as a private equity fund manager, possesses characteristics and incentives typical of short-term financial investors. The report added that this aspect should also be considered alongside the company's business nature, which assumes long-term operations.

In response, a Korea Zinc official stated: "It is important to note that Sustainable Best evaluated that maintaining the continuity of the current management system is relatively more aligned with the long-term interests of all shareholders, based on its assessment of the industrial expertise and importance of management capabilities in the non-ferrous metal smelting industry. All members of Korea Zinc's current management team and employees will actively communicate with market participants, strive to improve governance and enhance shareholder value, and ensure the smooth execution of new growth strategies such as Project Crucible and Troika Drive."

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*This content was translated by AI.