The Mixed Results of A Korean Governance “Reform”

Does a company still deserve a good governance grade if shareholder-friendly reforms also help the chairman cement his power and drive out rivals? South Korea’s fifth-largest family-owned conglomerate, which has $100 billion of assets, won approval from shareholders Tuesday to restructure most of its sprawling business under one holding company….Governance proponents are probably cheering Lotte’s moves, which take the candy-to-chemicals conglomerate’s cross shareholdings to 18 from 67. (Lotte’s chemical and hotel operations remain excluded from the holding company).

But Shelly Banjo argues that this is the right move for the wrong reasons, and it will consolidate the power of the insiders, the family who controls the company with 42.7 percent of the stock.

Source: Lotte’s Colored Lens – Bloomberg Gadfly

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