Seoul: Shareholders of LG Chem Ltd., South Korea's leading chemical firm, rejected Tuesday governance reform proposals presented by British activist fund Palliser Capital, maintaining the company's existing management structure, according to company officials.
According to Yonhap News Agency, shareholders voted against the proposals at an annual shareholders meeting, with the National Pension Service (NPS), LG Chem's second-largest stakeholder, opposing the measures on the grounds they could infringe on board authority.
Palliser had urged LG Chem to introduce advisory shareholder proposals, appoint a lead independent director and expand monetization of its stake in battery unit LG Energy Solution Ltd. (LGES), alongside share buybacks and cancellations. The London-based fund argued that LG Chem's "severe undervaluation" stemmed from the spin-off and dual listing of LGES, calling on shareholders to support its reform agenda.
The activist fund also proposed introducing equity-linked compensation for executives and incorporating metrics, such as net asset value (NAV) discount and return on equity (ROE), into key performance indicators. However, LG Chem argued the proposals were overly broad and lacked adequate safeguards, warning they could increase operational uncertainty.
The NPS echoed these concerns, saying the measures could limit board authority and undermine shareholder value, while noting that LG Chem has already outlined plans to monetize its LGES stake. Separately, shareholders approved the appointment of Kim Dong-choon, recently named president and chief executive officer (CEO), as an inside director.
On the facility's operations, Kim said the recent suspension of the company's No. 2 naphtha cracking centre (NCC) in Yeosu, about 315 km south of Seoul, is temporary, with a restart dependent on market conditions. He added that while LG Chem has secured naphtha supplies within the scope of U.S. sanctions exemptions, it is facing difficulties obtaining additional volumes amid rising tensions in the Middle East.