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CJ E&M mobilizes employees to silence shareholders

A CJ E&M staff member blocks reporters from entering the CJ E&M's Annual General Meeting of shareholders on March 20.
A CJ E&M staff member blocks reporters from entering the CJ E&M's Annual General Meeting of shareholders on March 20.
Lee Tae-hoon
Written by Lee Tae-hoon

CJ E&M, South Korea’s largest entertainment company, mobilized dozens of young employees to fill the seats of its annual general meeting (AGM) of shareholders which took place on March 20 at its headquarters in Sangam, Seoul.

“I was the only one who expressed an opinion today and all the young people were against my suggestion,” a shareholder who asked to be identified only as his surname Park said after the dubious shareholders’ meeting.

Park, a former LG Electronics worker, noted that everyone, except for him, blindly approved all proposals of the board and the rubber-stamp process was possible because CJ E&M mobilized its employees who were unashamed of opposing the critical views of shareholders.

While about a dozen shareholders entered the AGM after showing their IDs and being checked whether they are real shareholders or not, a throng of young people from the CJ E&M building kept entering the AGM without any identification check.

CJ-E&M-AGM

Young women enter the CJ E&M’s annual general meeting of shareholders which took place at the company’s building on March 20.

A senior staff member even made sure that their employees remove the company ID badge dangling from their neck before entering the AGM.

During the AGM, Park said he demanded the board of CJ E&M to distribute the dividend on the grounds that CJ E&M had failed to distribute any dividend over the past three years and that it made a net profit of about 235 billion won ($21.2 million) last year by selling its subsidiary CJ Games.

However, Kim Chan-hyeok, a spokesman to CJ E&M, argued that some of Park’s claims are baseless and all CJ E&M workers at the AGM were either shareholders or volunteers to set up the venue.

“We decided not to distribute the dividend as it was not a profit generated through a normal business. It was a profit created by selling assets and we believe it would be better off not to distribute the dividend to use it for investment,” he said.

The former LG employee, however, pointed out that he is familiar with the unethical ploy of mobilizing employees and using them to silence shareholders as he was one of the young employees instructed to fill the seats of AGMs. .

“I used to fill the seats like that when I was an employee,” he said, noting that most of the attendees at the CJ E&M AGM looked too young to be genuine shareholders.

“I think all of the people at the meeting were students… I mean young employees. There were less than 10 middle-aged people. Or perhaps I was the only one.”

Song Min-kyung, researcher at Korea Corporate Governance Service, said mobilization of staff is a common practice among of publicly-traded companies in Korea and you will be able to see people coming from elevators, instead of gates to attend AGMs.

“As the majority of attendees are often employees of the company, it is likely that they support the company’s plans. So it is hard to express opposing views or raise a question,” he said.

Song said companies like CJ E&M pick one Friday morning in March to minimize the attendance of shareholders, adding that people are more likely to take the day off on Friday than any other weekdays.

The CG Group and the majority of its affiliates, including CJ E&M, CJ CGV, CJ Korea Express, CJ Cheiljedang and CJ Hello Vision, held their AGMs simultaneously at 9 a.m. on March 20, making it impossible for shareholders to attend more than one.

CJ Group Chairman Lee Jay-hyun was recently released once again from prison for hospital treatment. He was sentenced to four years in prison last year and later reduced to three for a series of financial crimes including tax evasion and embezzlement of some 165.9 billion won ($150 million). CJ threatened that

CJ Group Chairman Lee Jay-hyun was recently released once again from prison for hospital treatment. He was sentenced to four years in prison last year and later reduced to three for a series of financial crimes including tax evasion and embezzlement of some 165.9 billion won ($150 million).

Yoon Hye-rang, researcher at Sustinvest, found that shareholders’ rights to participate in management process are heavily limited as companies hold AGMs simultaneously and often mobilize their own employees.

More than one third of the publicly-listed companies in Korea held an AGM on March 20, followed by another one third on March 27.

“We analyzed the annual general meeting results of 555 companies last year. Of 555 companies, 551 companies managed to pass resolutions as they had originally proposed,” she said. “Only four companies had their proposals rejected.”

She pointed out that in terms of the number of resolutions, only five resolutions, or 0.09 percent of the 5,667 resolutions, were turned down.

About the author

Lee Tae-hoon

Lee Tae-hoon

Lee Tae-hoon is publisher at The Korea Observer. He previously worked for the Korea Times and Arirang TV. You can reach him at lee@koreaobserver.com.

  • smithington

    Don’t you have some photos of drunk people to illegally post and then spend an afternoon apologizing for James “what’s this button do again” hyams?

    • Anonymous_Joe

      Non sequiturs.

      I don’t understand your first complaint, and this post wasn’t by or about the second.

      If you want to assume the responsibilities of a gadfly, then on this one you’re riding the wrong horse.

      Also, it would help if you provided links.

      • smithington

        it’d be helpful if you just keep up rather than show up nearly 3 weeks late to the party. The article is written by the person responsible for doing those things, and no, no links for the first, I don’t go around violating Korean law like some people, the second, well just scroll through the comments of this site. Beyond writing clickbait titles and touching keyboards in ways they aren’t comfortable with, apologizing for the other hack writers on this site and their behaviour is his third most favorite activity.

        • Anonymous_Joe

          smithington: “The article is written by the person responsible for doing those things…”

          I inferred and understood that much of your complaint.

          “… and no, no links for the first, I don’t go around violating Korean law like some people…”

          Posting the links to back your assertions would not violate Korean law.

          “…the second, well just scroll through the comments of this site. Beyond writing clickbait titles and touching keyboards in ways they aren’t comfortable with, apologizing for the other hack writers on this site and their behaviour is his third most favorite activity.

          …and those are somehow a criticism of this piece?

          I thought this piece was informative, credible, and suffered from none of the ailments you cited. So, what’s your problem then?

          • smithington

            The only way to put a link to it would be to link to the illegal content, and doing so would violate Korean law. Needless to say someone has a habit of posting photos that violate Korean law publicly on facebook.

            and no, you didn’t find it those things as evidenced by your other comment which highlights some of the giant holes in this article.

            By showing up 3 weeks late, you’re missing the entire context surrounding both the site and the nitwit at the helm.

  • Anonymous_Joe

    The former LG employee, however, pointed out that he is familiar with the unethical ploy of mobilizing employees and using them to silence shareholders as he was one of the young employees instructed to fill the seats of AGMs.

    …Song Min-kyung, researcher at Korea Corporate Governance Service, said mobilization of staff is a common practice among of publicly-traded companies in Korea and you will be able to see people coming from elevators, instead of gates to attend AGMs.

    First, aren’t corporate voting rights limited to the corporate shareholders, who are the owners of the company?

    Second, aren’t the number of votes allotted by shares owned?

    Third, doesn’t management work for the company’s owners (a.k.a., shareholders)?

    I am not understanding how seat fillers can shout down the voices of ownership. I, nonetheless, undrestand that many corporate shareholders don’t exercise their votes.

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