Heungkuk Asset Management sent a shareholder letter to SK Hynix on the 8th criticizing Chairman Choi Tae-won's announcement of a major semiconductor cluster investment plan in the southwestern region, questioning whether the board was bypassed, and retracted the letter on the 9th. The asset management firm stated the retraction was because the letter represented the personal opinion of its equity management division head rather than the company's official position, and some content could cause unnecessary misunderstandings. Chairman Choi, who is not a board member of SK Hynix but is the largest shareholder of SK Square (SK Hynix's largest shareholder), announced the investment plan on the 29th at a presidential event, prompting the governance concerns.
Heungkuk Asset Management Questions Board Approval Process
Heungkuk Asset Management sent a shareholder letter titled "Letter to the SK Hynix Board of Directors: Where is the Place for General Shareholders?" to SK Hynix. The letter stated: "The sight of our company's largest shareholder's largest shareholder, not a board member, announcing a large-scale investment plan externally together with the head of the administration is far from the global standard of board-centered management." The firm argued that Chairman Choi announcing the investment externally before formal board resolution violates global governance standards.
The letter expressed concerns: "We cannot erase deep concerns from the perspective of protecting the rights and interests of general shareholders and corporate governance while watching the recent series of management decision-making processes." It continued: "A structure in which an external entity controls the direction of astronomical cash flows before sufficient deliberation and resolution within the board may be a past practice, but it can never be considered exemplary." The letter requested: "Please transparently explain what in-depth discussions and deliberations took place between internal and external directors within the board."
Regarding shareholder return policy, the letter criticized: "In the midst of the industry's unprecedented boom, cash flow has improved beyond recognition, and employee compensation and massive investments are announced, but shareholders' place is nowhere to be seen." It compared: "Micron recently announced a policy to return all free cash flow (FCF) to shareholders, while SK Hynix's dividend this year showed a retreat in dividend payout ratio."
Company Retracts Letter Within One Day
Heungkuk Asset Management retracted the letter one day after sending it, following the expected repercussions from the letter's public disclosure. The company stated: "We confirmed that the head of the equity management division sent a letter by email to SK Hynix's IR representative on the afternoon of the 8th." It clarified: "This letter sent in the name of the equity management division to the SK Hynix board is not the position of Heungkuk Asset Management but the personal opinion of the head of the equity management division."
The company explained: "In particular, after confirming the content of the letter, we found that it not only differs from the company's position but also has some content that could cause unnecessary misunderstandings, so we retracted the letter." Heungkuk Asset Management explained that some of the funds it manages invest in SK Hynix.
Chairman Choi's Position in SK Hynix Structure
Chairman Choi is a non-registered executive of SK Hynix and is not a board member. He is the largest shareholder of SK Inc., which is the largest shareholder of SK Square, which in turn is the largest shareholder of SK Hynix. Chairman Choi announced the investment plan on the 29th at the Three Major Megaprojects National Report meeting presided over by President Lee Jae-myung at the Blue House.
FAQ
What did Heungkuk Asset Management criticize in its letter to SK Hynix?
Heungkuk Asset Management criticized Chairman Choi Tae-won's announcement of a major semiconductor cluster investment plan in the southwestern region before formal board approval, stating it was "far from the global standard of board-centered management." The letter also criticized SK Hynix's shareholder return policy, noting that while Micron announced a policy to return all free cash flow to shareholders, SK Hynix's dividend payout ratio retreated this year.
Why did Heungkuk Asset Management retract the shareholder letter?
Heungkuk Asset Management retracted the letter on the 9th, one day after sending it on the 8th, stating that the letter represented the personal opinion of its equity management division head rather than the company's official position. The company explained that after confirming the content, it found the letter not only differed from the company's position but also had some content that could cause unnecessary misunderstandings.
