Audit committee director vote set for Sept. 9 extraordinary meeting

Glass Lewis cites broad accounting and internal control experience

ISS, PIRC, Egan-Jones and Sustinvest also recommend approval

Advisers oppose MBK, Young Poong nominee Park Yu-kyung

An aerial view of Korea Zinc's Onsan smelter [Korea Zinc]
An aerial view of Korea Zinc's Onsan smelter [Korea Zinc]

Amid the ongoing management control dispute between Korea Zinc and MBK Partners and Young Poong, global proxy advisory firm Glass Lewis has come out in support of Baek In-gyu, the audit committee director candidate recommended by Korea Zinc's board. With both ISS and Glass Lewis now backing the same candidate, attention is turning to how institutional investors and retail shareholders will vote ahead of next month's extraordinary general meeting.

According to industry sources Thursday, Glass Lewis, in a proxy analysis report published Wednesday, recommended shareholders vote in favor of Baek for the agenda item on electing an independent director to serve as audit committee member at Korea Zinc's extraordinary general meeting on Sept. 9, while recommending a vote against Park Yu-kyung, the candidate put forward by MBK Partners and Young Poong.

Glass Lewis rated Baek more highly than Park on experience in accounting, auditing and internal controls. Baek holds certified public accountant qualifications in both South Korea and the United States and previously held a senior position at Deloitte Korea.

MBK Partners and Young Poong had questioned Baek's independence based on his Deloitte background, but Glass Lewis found no evidence that he had been directly involved in work related to Korea Zinc or had any material conflict of interest with the company.

Glass Lewis also partly accepted the company's account of its handling of accounting and internal control matters, viewing the audit committee's decision to pursue monitoring rather than a separate independent investigation — while regulatory and judicial proceedings related to accounting practices are ongoing — as a measured response.

The firm also factored in recently introduced internal control measures, including strengthened impairment testing and related-party identification procedures, expanded audit committee reporting on key accounting judgments, and tighter collaboration with external auditors and investment review controls. Korea Zinc said it meets all 15 key corporate governance indicators set by Korea Exchange.

ISS, UK-based PIRC, Egan-Jones Proxy Services and domestic advisory firm Sustinvest had all previously recommended voting for Baek. These firms generally emphasized that Baek possesses expertise directly relevant to audit committee duties across accounting, auditing, financial advisory and internal controls.

Sustinvest found no meaningful difference in independence between the two candidates but backed Baek based on a combined assessment of professional expertise, board composition and continuity of medium- to long-term management strategy.

ISS also weighed the fact that current management has maintained solid earnings despite the ongoing control dispute. Egan-Jones recommended voting against not only the MBK- and Young Poong-backed audit committee candidate but also their independent director nominees Lee Jun-bong and Shim Hye-seop.

"We believe the major proxy advisory firms have positively assessed management's efforts to sustain solid growth and improve corporate governance even amid a hostile takeover attempt," a Korea Zinc official said. "We will continue to focus on enhancing board independence and expertise, ensure conditions for effective internal controls and management oversight, and do our utmost to increase corporate value through respect for shareholders."


kwater@heraldcorp.com