Hana Financial Group is poised for a potential boost in shareholder returns as its chair is on track to secure his second term this month.
Glass, Lewis & Co., one of the world's two most influential proxy advisers, recommended that investors vote for the reappointment of Hana Financial Group Chairman and CEO Ham Young-joo, according to a local report on Monday.
Ham is set to secure another three-year term after being recommended as the sole candidate for the top job. His new term would extend through 2028, pending shareholder approval at the meeting scheduled for March 25.
Given that foreign investors own some 67 percent of the company, the backing of Glass, Lewis & Co. is likely to impact the vote. Investors include The Vanguard Group, Capital Research and Management Company, and BlackRock.
The chairman’s emphasis on enhancing shareholder returns is anticipated to gain further momentum, aligning with the group’s recent performance improvements. The shareholder return rate has significantly increased from 26 percent in 2021 to 38 percent in 2024 since Ham took over the role.
He affirmed his commitment to maximizing value for shareholders in line with the government’s corporate value-up program, which aims to help improve corporate valuations and boost the local stock market.
“As the group CEO, what I have focused on the most over the past three years has been ‘value-up,’ to expand shareholder returns and enhance valuation based on the group’s solid fundamentals,” Ham said while appearing on a video released by the group in February.
Starting this year, the company plans to implement fixed annual cash dividends and evenly distributed quarterly cash dividends, enhancing predictability regarding dividend amounts and contributing to stable cash flow for shareholders.
The group aims to improve key indicators of corporate value, such as earnings per share and book value per share, by increasing the proportion of stock buybacks and cancellations. This strategy is also expected to lead to a gradual increase in dividends per share as the number of outstanding shares decreases.
As part of such a move, Hana announced a stock buyback and cancellation amounting to 400 billion won ($275 million) on Feb. 4, the largest since the group's inception.
The financial conglomerate’s chair candidate recommendation committee has endorsed Ham for his leadership during a period of stellar growth. The conglomerate reported a consolidated net profit of 3.74 trillion won last year, marking its most profitable year since inception.
Ham plans to enhance the group's non-banking business portfolio to optimize limited capital and establish a sustainable profit model. The goal is to elevate the non-banking sector's contribution to the group's net profit to 30 percent in the future. Last year, non-banking affiliates accounted for about 16 percent of the net profit, a rise from just 4.7 percent the previous year.
Ham has managed to reduce some of the judicial risk burden associated with the mis-selling of derivative-linked funds.
Last week, the financial authorities lowered the level of sanctions imposed on Ham for internal control failure involving the mis-selling of derivative-linked funds that occurred in 2019-2020. This change aligns with the Supreme Court's decision that deemed the previous heavy penalties excessive.
The disciplinary action against Ham has been downgraded from a severe sanction to a cautionary warning. This adjustment may allow for more flexibility regarding his reappointment and future employment in the financial sector, which could have been restricted for three years under the heavier sanctions.
By Park Han-na (hnpark@heraldcorp.com)
