Samsung C&T wins majority of votes against activist funds

Samsung C&T headquarters in Gangdong District, eastern Seoul in 2019 [NEWS1]

Samsung C&T won an overwhelming majority of votes against activist funds over the latter’s demand for higher shareholder returns, driving its share price plunge in the market on Friday.

Samsung C&T, a key piece in Samsung group’s governance structure, held an annual general shareholder meeting that day at its headquarters in Gangdong District, eastern Seoul.

During the meeting, a proposal put forward by the fashion and construction company’s board of directors earned approval from 77 percent of its shareholders with voting rights. This brought this year’s dividends to 2,550 won ($1.92) per common share and 2,600 won per preferred share.

Moreover, the shareholders approved cancellation of Samsung C&T’s treasury stock of 1.9 million common shares and 159,835 preferred shares. As the company decided to cancel 5.9 million common shares in February, the combined value of treasury shares to be canceled amounts to some 1 trillion won.

Meanwhile, the proposals from five activist funds — including ANDA Asset Management, City of London Investment Management and Whitebox Advisors — fell through during the meeting.

The activist funds, representing 1.46 percent of stakes in total, demanded Samsung C&T to hand out dividends of 4,500 won per common share and 4,550 won per preferred share, and cancel treasury stock worth some 500 billion won.

The Samsung C&T share price took a plunge in the market after the company’s management won against the activist funds.

Samsung C&T shed 9.78 percent on the Kospi bourse to close at 151,000 won on Friday.

The coalition of activist funds has been urging Samsung C&T to adopt “a transparent, shareholder-friendly capital allocation framework” to address its “inadequate capital allocation approach and steep discount to its net asset value.”

The investor group demanded Samsung C&T to improve its shareholder return policies. This would have cost the company an additional 820 billion won in dividend payouts and treasury stock cancellation.

Samsung C&T is often considered a de facto holding company of the Samsung group, as Samsung Electronics Executive Chairman Lee Jae-yong holds 18.1 percent of Samsung C&T as the largest shareholder, which allows him and his family members a control over Samsung Life Insurance and Samsung Electronics.

Samsung C&T holds 19.34 percent of Samsung Life Insurance as the largest shareholder, while Lee holds 10.44 percent. Samsung Life Insurance has 8.51 percent of Samsung Electronics, Samsung C&T 5.01 percent and Lee 1.63 percent.

The combined stakes of Lee and his siblings in Samsung C&T represent 29.92 percent of the total.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]