Hanwha Corp. [000880, KOSPI]

Transcription

1 Proxy Report Hanwha Corp. [000880, KOSPI] CENTER GOOD CORPORATE GOVERNANCE 2011 Time and Venue Time Venue March 18, 2011 [Friday, 10:00 a.m.] 88 Kyung-Woon Dong, Jongro-gu, Seoul (Central Synagogue for Chundogyo) Agenda and Recommendation Item Agenda 1 Approval of Financial Statements and Appropriation of Income 2 Partial Amendment of the Company s AOI 4 Election of three () Internal Director and three () Outside Directors Election of one (1) Outside Directors as Members of the Audit Committee Seung-Yeon (Internal Director) Young-Sun Nam (Internal Director) Jae-Hong Park (Internal Director) Soo-Ki (Outside Director) Dong-Jin Choi (Outside Director) Jin-Ho Chung (Outside Director) Soo-Ki (Outside Director) 5 Approval of Limit on Remuneration of Directors PROXY INMATION ã - 1 -

2 Item 1 Approval of Financial Statements and Appropriation of Income The Company s BOD proposes that shareholders receive KRW 600/share (common stock) and KRW 650/share (preferred stocks) as the year-end dividend. (Unit: KRW Million) Total Asset 6,161,02 5,649,189 Total Liabilities,282,972,0,84 Total Shareholders Equity 2,878,0 2,18,46 Total Revenue 5,20,956 4,675,860 Operating Profits 24,226 24,978 Net Profits 274, ,471 Net Profit per share (Unit: KRW),661 7,490 Dividend Payout (Unit: KRW) Recommendation: 600 (common) 650 preferred) 600 (common) 650 (preferred) The Company s BOD proposed to pay KRW 600/share (common stockholders) and KRW 650 (preferred stockholders) as the year-end dividend. Compared to the previous year, the Company has recorded increase of 9% in total revenue but recorded substantial decrease in net profits. However, the Company has maintained the dividend amount. The statements as proposed by the management do not appear to have any particular problems. Therefore, recommends a vote this item. Item 2 Partial Amendment of the Company s AOI The Company s BOD proposes to partially amend the Company s AOI as the followings. 1. Change business domain: from exporting alcohol related products to exporting and distribution of alcohol related products. 2. Shorten the Closing period which is needed for Shareholders Register. The Company wishes to change directors term from to or less Recommendation: The statements as proposed by the management do not appear to have any particular problems. recommends a vote this item. PROXY INMATION ã - 2 -

3 Item Election of Directors The Company s BOD proposes to elect three () Internal Directors and three () Outside Directors Item: Candidates for internal directorship: Seung-Yeon, Young-Sun Nam, Jae-Hong Park [Candidates for the Internal Directorship] Seung- Yeon Young- Sun Nam Jae- Hong Park MA in Int l Politics, DePaul Univ. (Current) Chairman of Hanwha Group and Rep. Dir. of Hanwha Corp. (Current) Rep. Dir., Hanwha Chemical Rep. Dir., Hanwha Corp. Former, Hanwha L&C Former Head of Japan Operation, Hanwha Corp. Recommendation: Candidate Seung-Yeon : Candidate Young-Sun Nam and Jae-Hong Park: Re-Elect Re-Elect For New For The repeated offenses of Candidate Seung-Youn are also one of the risk factors that affect corporate governance. During the presidential election in 2002, Chairman Seung-Youn was indicted for illegally providing political funds in the amount of KRW 1 billion. He was sentenced to a stay of execution at the trial court while the penalty was mitigated to a fine at the appellate court. Moreover, he was investigated by the prosecution on the charges of malfeasance, bribery, etc. under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes but he was not prosecuted due to lack of sufficient material evidence. was also convicted of lynching in retaliation for an attack on his son and sentenced to one year in prison, three of stay of execution and 200 hours of community service at the appellate court. Consequently, Chairman resigned from his position as the representative director of Hanwha and Hanwha Engineering & Construction Corp. After the special pardon by the President of Korea, Chairman recouped the directorship of two corporations; Hanwha Corporation and Hanwha Construction. Most recently, Candidate has been indicted by the Prosecutor for being involved in criminal misappropriation, embezzlement and maintaining sluch funds. Sooner or later, the trial will commence. Considering all these facts, recommends a vote the election of Candidate Seung-Yeon. PROXY INMATION ã - -

4 With respect to Candidate Young-Sun Nam and Candidate Jae-Hong Park, finds no particular problem and/or reason to disqualify their candidacy. Therefore, in deference to the BOD, recommends a vote the election of these two candidates. Item: Candidates for outside directorship: Soo-Ki, Dong-Jin Choi, Jin-Ho Chung [Candidates for the Outside Directorship] Soo-Ki Dong-Jin Choi Jin-Ho Chung Former Head of Accounting Dept., Jeil Fire Insurance Executive, Accounting Part, Korea Machinery Graduated from Military Academy Division Commander (0 th Div.) Former Ministry of Defense Managing Partner, Law Firm of Dong-In Deputy Minister, Ministry of Justice For Recommendation Candidate Soo-Ki & Candidate Jin-Ho Chung: According to guideline, if a party who served either the company or its affiliates as an executive in the past, would recommend a vote against the election as an outside director. With respect to Candidate Soo-Ki, he served an affiliate (Jeil Fire & Marine) of Hanwha Corp since Even prior to that, he served other affiliated companies of Hanwha Corp. Considering all these facts, recommends a vote the election of Candidate Soo-Ki. According to s guideline, if a party shows low attendance rates (75% or less) as an outside director while serving the Company, would recommend a vote against the election of such candidate or candidates. With respect to Candidate Jin-Ho Chung, he has shown low attendance rates (80%, 58%, and 20%) during the past three. Considering these facts, recommends a vote the election of Candidate Jin-Ho Chung. Candidate Dong-Jin Choi: With respect to Candidate Dong-Jin Choi, he showed an outstanding attendance rate (100% for the past three ). In addition, was not able to find any problems or reasons to disqualify his candidacy, and hence, recommends a vote his election. PROXY INMATION ã - 4 -

5 Item 4 Election of a member of the Audit Committee The Company proposes to elect Candidate Soo-Ki as a member of the Audit Committee. [Candidates for the Outside Directorship] Soo-Ki Former Head of Accounting Dept., Jeil Fire Insurance Executive, Accounting Part, Korea Machinery Recommendation: With respect to Candidate Soo-Ki, as the same reason as stated under Item, recommends a vote the election. Item 5 Approve Limit on Remuneration of Directors The BOD proposes to increase the directors remuneration ceiling to KRW 11 billion, which is a KRW 1 billion increase from the previous year. Recommendation : According to s policies, shareholders should not vote for items that do not disclose the amount of compensation paid to individual directors in the past, or that do not disclose rational procedures or processes to determine directors compensation, even if the directors remuneration ceiling appears to be rational on the surface. Directors compensation is an important means for shareholders to evaluate and to motivate corporate directors, and as such, should be determined under fair and transparent procedures. As for Hanwha Corporation, no specific amount of compensation is set for individual directors. Also, shareholders are not informed of any decision procedure or evaluation criteria concerning compensation. Therefore, recommends a vote this item. Ó Copyright 2011 by the Center for Good Corporate Governance, 7th floor, Pirun Bldg.214, Pirun-dong, Jongno-gu, Seoul, Korea. All rights reserved. All information contained herein is copyrighted in the name of the Center for Good Corporate Governance (""), and none of such information may be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any such purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person without 's prior written consent. All information contained herein must be construed solely as, statements of opinion and not statements of recommendation to purchase, sell, or hold any securities. All information contained herein is obtained by from sources believed by it to be accurate and reliable. However, we make no warranty, expressed or implied, regarding the accuracy, completeness, or usefulness of this information. Under no circumstances shall assume liability with respect to the consequences of relying on this information for investment or other purposes. PROXY INMATION ã - 5 -