- Park: "Kumho Petrochemical's shareholder value is significantly undervalued despite its outstanding operating performance compared to its peers."
- He aims to raise both shareholder and corporate value by improving the fundamentals to meet global standards through 'focus on future growth', 'improved governance' and 'management for sustainability'
- He will carry on active communication with fellow shareholders via 'Go Beyond, Kumho Petrochemical' website to voice his ideas for enhancing corporate and shareholder value
SEOUL, South Korea, March 4, 2021 /PRNewswire/ -- Park Chul Whan, the largest individual shareholder and senior executive of Kumho Petrochemical, released his 'Proposal to Enhance Corporate Value,' and set out to communicate with other shareholders ahead of the annual general meeting of shareholders to be held this month.
The proposal, subtitled 'Transforming into a Company for All Shareholders', provides detailed guidelines to achieve innovation, containing 'Background of the Shareholder Proposal', 'Current Status of Kumho Petrochemical and the Need for Change', 'Measures to Enhance Shareholder Value' and 'Measures to Enhance Corporate Value'.
Park said, "This shareholder proposal is the first step in enhancing shareholder and corporate value." And emphasized the necessity of 'normalizing shareholder return policy', 'efficient management of resources' and 'well-grounded investment decisions to secure drivers of future growth'. He stressed the need to establish an organization that can supervise and hold the board of director's decision-making process as well as its reform in check.
Factors cited as causes of Kumho Petrochemical's low corporate and shareholder value include - increased cost of capital due to excessive cash holdings and low debt - shareholder-unfriendly policies such as low payout ratio and excessive level of treasury stock - decreased growth potential as a result of inappropriate investments. The proposal states that although Kumho Petrochemical outcompetes its domestic and foreign peers in profitability and operating performance, aforementioned management issues have destroyed shareholder value and caused the company's stock price to remain undervalued for the past 10 years.
Park proposed - focus on future growth - improved governance and - management for sustainability as measures to improve the company's overall corporate fundamentals. His proposal presents a mid-to-long-term plan to transform Kumho Petrochemical into a global company that 'prepares for future, communicates with stakeholders and leads environmental action' through new strategic management and business operation differentiated from today's.
In terms of having a 'focus on future growth', the proposal prioritizes the recovery of the company's financial soundness through retirement of long-held excess treasury shares, IPO of affiliate companies and disposal of insolvent assets unrelated to the company's main business. With the freed-up financial resources through these measures, this plan aims to normalize Kumho Petrochemical's low shareholder value by raising the payout ratio from the current 10% to the peer average of 50%. Furthermore, Park revealed in the proposal that the company will reinforce the competitiveness of its core business with sufficient liquidity, while investing in future growth engines by expanding into new business areas such as rechargeable battery and hydrogen, to create synergies with its existing businesses.
As for 'improved governance', Park made the case for the establishment of a democratic and fair corporate governance that meets global standards. To this end, Park said that he will lead efforts to organize board members based on expertise and diversity, secure independence of the board of directors in relation to the company organization and policies, and foster a corporate culture that facilitates open communication with shareholders, employees, community members and other various stakeholders.
Lastly, addressing 'management for sustainability', Park declared to manage risks by internalizing ESG (Environment, Social and Governance) values in line with the paradigm shift towards ESG management. He emphasized the need for creating an eco-friendly corporate culture and overhauling related policies to that end, and proclaimed to launch a team dedicated to ESG management that reports directly to the CEO and strengthen procedural safety at work based on the principle of 'Safety First'.
Park added, "Now is the time to move forward with plans to achieve innovation, as the company is achieving record high operating performance since its foundation in the midst of COVID-19 windfall," and once again emphasized, "This proposal was based on a long period of deliberation, with the sole purpose of enhancing long-term corporate and shareholder value, from the standpoint of a senior executive and single largest shareholder of Kumho Petrochemical." He further urged for the company's good-faith cooperation to guarantee all shareholders' procedural rights with respect to the proposal and for accurate and transparent communication with shareholders on the matter.
The full proposal is available to the public on website (GoBeyondKumhoPetrochemical.com). Park will carry out active communication with his fellow shareholders via the website and will continue to voice his ideas for enhancing corporate and shareholder value.