The season of general shareholders’ meetings, also known as "hearings of the financial world," is in full swing. This year, with activist funds' voices being expected to become more prominent under the ‘Corporate Value-up Program’, which emphasizes “expanding shareholder returns," Yonhap Infomax spotlights lawyers of Lin who represented a coalition of five activist funds at Samsung C&T's general shareholders' meeting.
 
Five activist funds, including City of London in the UK, have sent shareholder letters to Samsung C&T since the end of last year demanding an expansion of dividends and purchase of additional treasury stocks amounting to 500 billion KRW.
 
Samsung C&T is 33.63% owned by Samsung Electronics Chairman Lee Jae-Yong and specially related persons, while only 1.46% is owned by the five activist funds making it unlikely that such proposal would pass even if it was put on the agenda. Although it was a long shot, Lin focused not on the "odds" but on the "social contribution" that the proposal could make in creating a shareholder-friendly corporate ecosystem.
 
At 8:00 a.m. on March 15^th, the day of Samsung C&T's 60th Annual General Meeting of Shareholders,
 
Lawyers from top law firms gathered at Samsung's Global Engineering Center (GEC), where the meeting was held. Kim & Chang's Park Jong-Hyun, and Lin's Do Hyun-Soo and Milosz Zurkowski met in the lobby to talk. Kim & Chang represents Samsung C&T, and Lin represents five hedge funds.
 
They, once colleagues at Kim & Chang, greeted each other and talked about different issues, including recommendations from global proxy advisory firms, and all of them did not look nervous at all.
 
At 9:00 a.m., the venue for Samsung C&T’s general shareholders’ meeting turned into a coliseum for hedge funds and the company.
 
Whenever each agenda item was presented, small shareholders expressed their disappointment. "The answer lies in the stock price. Even a bad company can be regarded as a good one if it has a good stock price, and even a good company can be regarded as a bad one if it has a bad stock price," they said. They also added, "we want to hear whether the executives and staff members of Samsung C&T, which is the best company in Korea, are doing their best to restore the pre-merger stock price, and how desperate they are.”
 
The shareholder letters from activist funds have ignited the anger of small shareholders turning them into strong supporters of the hedge funds. The 23% approval rate is the evidence of it. Excluding the 1.4% stake held by the coalition of five hedge funds, shareholders holding not less than 20% of the stake were persuaded, which is translated into almost 32 million shares in terms of stock quantity.
 
The third agenda item, a proposal to buy back additional shares, was also approved by 18% of the votes, or about 24 million shares.
 
“In the second half of next year, we will consider various ways to enhance shareholder returns to meet their demands.”
 
Although the proposals on cash dividends and repurchase of additional shares were rejected, Do and Zurkowski of Lin could leave the meeting with a smile on their faces because, despite the significant disparity in ownership rates, they won the support of not less than 20% of institutional investors and minority shareholders, including the endorsement of ISS and Glass Lewis among other major global voting rights advisory firms, and led the company to proactively reviewing its policy for shareholder returns.
 
Moving forward, Lin will continue to pursue values beyond the odds and progress with a long-term perspective.
 
- Source: Yonhap Infomax
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