Samsung C&T shares fall amid test of South Korea’s corporate reform push

SEOUL : Shares in South Korea’s Samsung C&T fell by 10 per cent on Friday after shareholders defeated a proposal by activist funds to elevate dividend payouts, disappointing investors amid a govt push to elevate the price of Seoul-listed firms.

Samsung C&T is the Samsung conglomerate’s de-facto maintaining company, with Samsung Electronics Chairman Jay Y. Lee the finest shareholder.

At its annual overall meeting (AGM), Samsung C&T shareholders voted 77 per cent to 23 per cent to support the board of administrators’ shareholder return device, in preference to the device from activist funds, an organization spokesperson acknowledged, without commenting additional.

Huh Jae-hwan, an analyst at Eugene Investment Securities, acknowledged the vote became once symbolic which skill of it is Samsung.

“It became once an event that raised doubts over whether or no longer there shall be actual adjustments in firms’ shareholder returns and worries that it would restful take a long time for improvements in governance structure of Korean firms,” Huh acknowledged.

Restful, the 23 per cent vote for the activist proposal became once excessive compared with same makes an strive within the past, and provided that retail investors beget no longer in overall merit the AGMs, analysts acknowledged.

After the vote, Samsung C&T shares dropped by as fundamental as 10.1 per cent, withdrawing from a greater than eight-year excessive hit on Thursday, ending the session with their worst on a conventional basis efficiency since Would possibly well well well perhaps furthermore 2015.

Last month, South Korea unveiled an organization reform device, dubbed the “Company Price-up Programme”, in an goal to take care of the so-known as “Korea bargain”.

The slash price refers to a tendency for Korean firms to be undervalued compared with world peers which skill of components comparable to low dividend payouts and the dominance of opaque conglomerates identified as chaebols.

Earlier this year, a community of Samsung C&T shareholders, led by ANDA Asset Administration, Metropolis of London Investment Administration Firm and Whitebox Advisors, submitted a proposal to raise annual dividend payouts to 4,500 won ($3.38) per frequent share and 4,550 won per most standard share.

That compared with the board’s proposal of two,550 won per frequent share and a pair of,600 per most standard share, which is a complete of 417.3 billion won price of dividends, already up 11 per cent from 376.4 billion the old year.

Shareholders furthermore voted down 82 per cent to 18 per cent the activists’ proposal to allocate 500 billion won to a share repurchase programme.

“Investors’ hopes were a minute bit excessive, provided that the activist funds’ build apart a question to became once somewhat unreasonable, and Samsung had already announced its enjoy device for shareholder return,” acknowledged Kim Soo-hyun, an analyst at DS Investment Securities.

“That acknowledged, Samsung also shall be much less motivated than others, which skill of its succession route of is already command out and ongoing,” Kim acknowledged.

South Korea’s National Pension Carrier (NPS), a first-rate stakeholder in Samsung C&T, voted for the board’s proposal, saying the activists proposal became once “too fundamental”, a day after NPS acknowledged it supported the government’s company reform device. The command pension fund has titanic stakes in main conglomerates.

On Thursday, South Korea’s financial market watchdog met with asset management firms and entreated them to vote in ways that boost investor returns and company price at AGMs in March.

($1 = 1,329.4200 won)