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.
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.
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.