Shareholder meetings a tense affair as investors feel sidelined, management feels cornered

Shareholders attend Hanwha Aerospace's 48th annual general meeting at Seongnam Chamber of Commerce and Industry in Gyeonggi on March 25. [NEWS1] At 9 a.m. on March 25, shareholders gathered at the Seongnam Chamber of Commerce in Gyeonggi to attend Hanwha Aerospace’s annual shareholder meeting. But for many, the main agenda item wasn’t what appeared on the official documents — it was the company’s surprise announcement just five days earlier of a 3.6 trillion won ($2.5 billion) rights offering. “The company announced a major equity issue that is a huge negative for the stock price just before the meeting,” a 30-year-old shareholder surnamed Kim said in disbelief after traveling from Yeongdeungpo District in Seoul to attend the meeting. Related ArticleSpeaking up for value-up: Retail investors make presence felt at shareholder meetingsFSS chief offers to resign after Han's veto of shareholder protection billHosting an annual shareholders' meeting? 'Prepare earlier,' says ESG veteran As questions poured in, Han Sang-yoon, a managing director at Hanwha, defended the timing. “It’s difficult to discuss a planned rights offering in the domestic market beforehand,” he said. “We had to maintain confidentiality.” Hanwha’s handling of the announcement stood in stark contrast to that of Boeing. The firm carried out a $24.3 billion rights issue last October — the largest in its 109-year history — without any major pushback. Reports from the Financial Times and the Wall Street Journal called it a “milestone” and praised the bold move. “Boeing was transparent about its need to raise capital due to the risk of a credit downgrade,” said Lee Nam-woo, chair of the Korea Corporate Governance Forum. “The market trusted the company, and its leadership respected all shareholders, unlike Korean companies.” “Boeing carried out its rights issue in response to a management crisis. It wasn’t a shareholder-allotted offering but a public one targeting institutional investors, so the situation was different from Hanwha’s,” the Korean firm said in response to the comparison. “We disclosed information related to the capital increase to shareholders as quickly as possible, within the scope permitted by relevant regulations,” Hanwha added. The Boeing logo is displayed on a screen at the New York Stock Exchange in New York on Aug. 7, 2019. [REUTERS/YONHAP] The JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, found widespread shortcomings in its analysis of annual shareholder meetings for major affiliates of Korea’s top 20 conglomerates, including Samsung Electronics, SK Telecom, Hyundai Motor, Posco Holdings and Lotte Shopping. Meetings fell short in three areas: scheduling, disclosure and substance. The government has pushed for “value-up” measures aimed at improving corporate value and shareholder rights, but at most annual general meetings (AGM), companies merely asked, “Any objections?” before moving on. Stephanie Lin, country research head for Korea and Singapore at the Asian Corporate Governance Association, said the main issue is structural. “Korea lacks mechanisms to guarantee meaningful shareholder participation,” she said. “AGMs are bunched on the same day and voting procedures remain opaque.” She also pointed out that Korea’s 14-day notice period for an AGM lags far behind global norms. Berkshire Hathaway Chairman Warren Buffett attends Berkshire Hathaway's annual shareholders' meeting in Omaha, Nebraska, on May 3, 2024. [REUTERS/YONHAP] In the United States, investor engagement looks very different. Warren Buffett’s Berkshire Hathaway hosts its AGM in Omaha, Nebraska, every May, attracting around 20,000 shareholders annually. Buffett and executives spend five to six hours fielding questions on everything from long-term strategy to minor issues. Big Tech CEOs like Tesla’s Elon Musk, Nvidia’s Jensen Huang and Apple’s Tim Cook also make a point of addressing shareholders directly during AGMs. The trend of concentrating the meetings in a single week remains entrenched in Korea. Among the 20 companies surveyed, 15 held their meetings during the fourth week of March, with eight AGMs scheduled on March 26 alone. This clustering restricts shareholders’ ability to attend multiple meetings and exercise their rights meaningfully. Even when present, shareholders often receive only cursory summaries of key agenda items. Companies frequently deflect by telling attendees to “refer to the documents.” According to the Korea Listed Companies Association, the average AGM at 793 listed firms lasted just 33 minutes last year. An investor relations representative at a major conglomerate admitted that firms feel pressure. “Some shareholders disrupt proceedings, so we try to hold meetings on the same day to avoid unexpected incidents,” they said. Samsung Electronics holds its 56th annual general meeting at the Suwon Convention Center in Gyeonggi on March 19. [SAMSUNG ELECTRONICS] Despite the Korea Exchange’s recommendation to notify shareholders at least four weeks before an AGM, no company in the survey released its annual report two weeks in advance. Even top firms like Samsung Electronics, Hyundai Motor, LG Electronics, Posco Holdings and Hanwha disclosed their agendas only eight days prior. Explanations for key items were often lacking. One company listed a director nominee’s plan as simply, “Will pursue constructive discussions.” Shareholder return plans were virtually nonexistent. Of the 20 companies surveyed, only Emart included a shareholder proposal on the agenda. “Proposals from anyone other than controlling shareholders are still extremely rare, even if minority shareholders have become more active recently,” said Hur Joon-young, an economics professor at Sogang University. “Shareholder ownership and company management are not separated here, which discourages diverse proposals,” Hur said. Only 41 out of 2,460 listed companies, or 2.4 percent, submitted shareholder proposals this year, according to Lee Na-ye, an analyst at Korea Investment & Securities. “Only one of those related to dividends or share buybacks passed,” Lee noted. “Meanwhile, all 681 companies that proposed director compensation limits had their items approved.” Companies argue that they face an uphill battle. With limited tools to protect management's control — especially beyond treasury shares — they feel vulnerable. Poison pills, which are widely accepted in advanced economies, remain off the table in Korea. Recent unfavorable developments haven’t helped. Firms face legal uncertainty amid changes to corporate law, political turmoil following former President Yoon Suk Yeol's martial law and impeachment, U.S. tariffs and growing shareholder activism. It has been proposed that the Commercial Act be amended to expand directors’ fiduciary duty to include shareholders. Hwang Se-woon, a senior researcher at the Korea Capital Market Institute, said the solution isn’t just tighter oversight. “If the government wants better AGMs, it shouldn’t just wield a stick,” Hwang said. “It needs to offer carrots too, encouraging firms to improve through incentives.” Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY KIM KI-HWAN, CHOI SUN-EUL, NA SANG-HYEON AND NOH YU-RIM [[email protected]]

Shareholder meetings a tense affair as investors feel sidelined, management feels cornered Published: 15 Apr. 2025, 17:08 Updated: 15 Apr. 2025, 17:15 Audio report: written by reporters, read by AI Shareholders attend Hanwha Aerospace's 48th annual general meeting at Seongnam Chamber of Commerce and Industry in Gyeonggi on March 25.

[NEWS1] At 9 a.m. on March 25, shareholders gathered at the Seongnam Chamber of Commerce in Gyeonggi to attend Hanwha Aerospace’s annual shareholder meeting.

But for many, the main agenda item wasn’t what appeared on the official documents — it was the company’s surprise announcement just five days earlier of a 3.6 trillion won ($2.5 billion) rights offering.

“The company announced a major equity issue that is a huge negative for the stock price just before the meeting,” a 30-year-old shareholder surnamed Kim said in disbelief after traveling from Yeongdeungpo District in Seoul to attend the meeting. Related Article Speaking up for value-up: Retail investors make presence felt at shareholder meetings FSS chief offers to resign after Han's veto of shareholder protection bill Hosting an annual shareholders' meeting? 'Prepare earlier,' says ESG veteran As questions poured in, Han Sang-yoon, a managing director at Hanwha, defended the timing. “It’s difficult to discuss a planned rights offering in the domestic market beforehand,” he said.

“We had to maintain confidentiality.” Hanwha’s handling of the announcement stood in stark contrast to that of Boeing. The firm carried out a $24.

3 billion rights issue last October — the largest in its 109-year history — without any major pushback. Reports from the Financial Times and the Wall Street Journal called it a “milestone” and praised the bold move. “Boeing was transparent about its need to raise capital due to the risk of a credit downgrade,” said Lee Nam-woo, chair of the Korea Corporate Governance Forum.

“The market trusted the company, and its leadership respected all shareholders, unlike Korean companies.” “Boeing carried out its rights issue in response to a management crisis. It wasn’t a shareholder-allotted offering but a public one targeting institutional investors, so the situation was different from Hanwha’s,” the Korean firm said in response to the comparison.

“We disclosed information related to the capital increase to shareholders as quickly as possible, within the scope permitted by relevant regulations,” Hanwha added. The Boeing logo is displayed on a screen at the New York Stock Exchange in New York on Aug. 7, 2019.

[REUTERS/YONHAP] The JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, found widespread shortcomings in its analysis of annual shareholder meetings for major affiliates of Korea’s top 20 conglomerates, including Samsung Electronics, SK Telecom, Hyundai Motor, Posco Holdings and Lotte Shopping. Meetings fell short in three areas: scheduling, disclosure and substance. The government has pushed for “value-up” measures aimed at improving corporate value and shareholder rights, but at most annual general meetings (AGM), companies merely asked, “Any objections?” before moving on.

Stephanie Lin, country research head for Korea and Singapore at the Asian Corporate Governance Association, said the main issue is structural. “Korea lacks mechanisms to guarantee meaningful shareholder participation,” she said. “AGMs are bunched on the same day and voting procedures remain opaque.

” She also pointed out that Korea’s 14-day notice period for an AGM lags far behind global norms. Berkshire Hathaway Chairman Warren Buffett attends Berkshire Hathaway's annual shareholders' meeting in Omaha, Nebraska, on May 3, 2024. [REUTERS/YONHAP] In the United States, investor engagement looks very different.

Warren Buffett’s Berkshire Hathaway hosts its AGM in Omaha, Nebraska, every May, attracting around 20,000 shareholders annually. Buffett and executives spend five to six hours fielding questions on everything from long-term strategy to minor issues. Big Tech CEOs like Tesla’s Elon Musk, Nvidia’s Jensen Huang and Apple’s Tim Cook also make a point of addressing shareholders directly during AGMs.

The trend of concentrating the meetings in a single week remains entrenched in Korea. Among the 20 companies surveyed, 15 held their meetings during the fourth week of March, with eight AGMs scheduled on March 26 alone. This clustering restricts shareholders’ ability to attend multiple meetings and exercise their rights meaningfully.

Even when present, shareholders often receive only cursory summaries of key agenda items. Companies frequently deflect by telling attendees to “refer to the documents.” According to the Korea Listed Companies Association, the average AGM at 793 listed firms lasted just 33 minutes last year.

An investor relations representative at a major conglomerate admitted that firms feel pressure. “Some shareholders disrupt proceedings, so we try to hold meetings on the same day to avoid unexpected incidents,” they said. Samsung Electronics holds its 56th annual general meeting at the Suwon Convention Center in Gyeonggi on March 19.

[SAMSUNG ELECTRONICS] Despite the Korea Exchange’s recommendation to notify shareholders at least four weeks before an AGM, no company in the survey released its annual report two weeks in advance. Even top firms like Samsung Electronics, Hyundai Motor, LG Electronics, Posco Holdings and Hanwha disclosed their agendas only eight days prior. Explanations for key items were often lacking.

One company listed a director nominee’s plan as simply, “Will pursue constructive discussions.” Shareholder return plans were virtually nonexistent. Of the 20 companies surveyed, only Emart included a shareholder proposal on the agenda.

“Proposals from anyone other than controlling shareholders are still extremely rare, even if minority shareholders have become more active recently,” said Hur Joon-young, an economics professor at Sogang University. “Shareholder ownership and company management are not separated here, which discourages diverse proposals,” Hur said. Only 41 out of 2,460 listed companies, or 2.

4 percent, submitted shareholder proposals this year, according to Lee Na-ye, an analyst at Korea Investment & Securities. “Only one of those related to dividends or share buybacks passed,” Lee noted. “Meanwhile, all 681 companies that proposed director compensation limits had their items approved.

” Companies argue that they face an uphill battle. With limited tools to protect management's control — especially beyond treasury shares — they feel vulnerable. Poison pills, which are widely accepted in advanced economies, remain off the table in Korea.

Recent unfavorable developments haven’t helped. Firms face legal uncertainty amid changes to corporate law, political turmoil following former President Yoon Suk Yeol's martial law and impeachment, U.S.

tariffs and growing shareholder activism. It has been proposed that the Commercial Act be amended to expand directors’ fiduciary duty to include shareholders. Hwang Se-woon, a senior researcher at the Korea Capital Market Institute, said the solution isn’t just tighter oversight.

“If the government wants better AGMs, it shouldn’t just wield a stick,” Hwang said. “It needs to offer carrots too, encouraging firms to improve through incentives.” Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY KIM KI-HWAN, CHOI SUN-EUL, NA SANG-HYEON AND NOH YU-RIM [ [email protected] ] var admarutag = admarutag || {} admarutag.cmd = admarutag.cmd || [] admarutag.

cmd.push(function () { admarutag.pageview('3bf9fc17-6e70-4776-9d65-ca3bb0c17cb7'); });.