[Exclusive] "Let’s Oppose Welldex Owner’s Disregard for Shareholders"... VIP Asset Management to Hold First-Ever Public Proxy Contest

First-Generation Value Investor VIP Asset Management Solicits Proxy Voting
VIP Asset Management Moves to Stop Welldex's Neglect of Ordinary Shareholders
Owner Family's "Splitting Proposals" Tactic to Secure Executive Pay
Exclusion of Electronic and Written Voting Blocks Institutional and Individual Shareholder Participation

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VIP Asset Management, a leading value investment management firm in Korea, is set to engage in a public proxy contest for the first time in its history. This move comes as Welldex, a manufacturer of semiconductor etching components, has taken steps to aggressively protect the interests of its largest shareholder while effectively blocking ordinary shareholders from exercising their voting rights, prompting VIP Asset Management to take a stand.

According to the financial investment industry on June 17, VIP Asset Management plans to oppose the director compensation proposal to be presented at Welldex's extraordinary general shareholders' meeting scheduled for June 29, and will also solicit proxy voting from ordinary shareholders. This marks the start of a full-scale response since VIP Asset Management shifted its investment objective from "pure investment" to "general investment" on June 9. VIP Asset Management is the second-largest shareholder of Welldex, holding a 15.64% stake.

Until now, VIP Asset Management has maintained a moderate approach, actively communicating with its portfolio companies to drive growth and enhance shareholder value together. However, the case of Welldex is different. Despite strong business competitiveness and a solid financial structure, Welldex has maintained an excessively low dividend payout ratio and overly high executive compensation. Even after multiple suggestions from VIP Asset Management to management and the largest shareholder, Welldex has deliberately chosen actions that undermine shareholder value, leading VIP Asset Management to take urgent defensive measures.

"At Least Raise Their Children's Salaries"... 'Splitting Proposals' after Defeat

At its regular shareholders' meeting in March, Welldex proposed increasing the directors' compensation ceiling from 7 billion won to 8 billion won, but the motion was voted down (30.8% in favor, 69.2% opposed). Nevertheless, Welldex has reintroduced the same proposal at the upcoming extraordinary shareholders' meeting on June 29. Instead of modifying the compensation ceiling, the company resorted to a "tactic" of splitting the agenda into "directors excluding the CEO" and "CEO." Under the Commercial Act, Bae Jong-sik, CEO of Welldex and the largest shareholder, cannot exercise voting rights on his own compensation proposal as a party with special interests. By separating the proposals, it appears intended to allow voting on the compensation increase for his two children, Bae Youngsoo and Bae Gihwa, who are inside directors.

Previously, Welldex has maintained the directors' compensation ceiling at 7 billion won for three consecutive years, but the actual execution rate averaged only 28.1% over the past three years. Because of the large gap between the ceiling and actual payments, the company has been able to increase compensation by double-digit percentages each year—21.1% in 2024 and 13.6% in 2025—without additional shareholder approval. Even though the company's performance declined slightly last year, CEO Bae's performance bonus actually increased by 36.8%. VIP Asset Management pointed out, "The National Pension Service also opposes the setting of excessive compensation ceilings," adding that "as of last year, the compensation ceiling per Welldex director exceeds four times that of industry peers."

Strong Liquidity, Yet Neglect of Shareholder Returns... Succession Intentions Suspected

Welldex is a KOSDAQ-listed company that manufactures and sells silicon electrodes and rings used in semiconductor etching processes. The company enjoys a global oligopoly position in the semiconductor materials and components sector, and is expected to benefit from the recent surge in demand for artificial intelligence (AI) infrastructure. Its five-year average operating margin is 21.3%, and return on equity (ROE) is 22.7%, placing it at the top of its industry. As of the first quarter of this year, its short-term financial instruments and cash equivalents amounted to 230 billion won. Nevertheless, as of the previous day, the company's market capitalization was only 435.8 billion won.

Despite this strong liquidity, Welldex's dividend payout is virtually nonexistent. Over the past three years, Welldex has recorded net profits of about 160 billion won, but total dividends paid during this period amounted to just 3.6 billion won—less than the approximately 4 billion won in total compensation received by CEO Bae over the same period. Some observers have raised questions whether Welldex's extremely passive shareholder return policy is intended to facilitate future management succession. Born in 1951, CEO Bae is the largest shareholder with a 34.79% stake, but his two children, who are involved in management, hold no shares. For succession, the children would need to secure a significant equity stake; the lower the share price, the less burden they would face in terms of gifting or inheritance taxes.

VIP Asset Management commented, "If the company continues to repeat decision-making that is passive in shareholder returns and corporate value enhancement, regardless of intent, the market may view this as intentional 'demarketing' by the company itself, lowering its attractiveness as an investment."

Electronic and Written Voting Excluded... Ordinary and Institutional Shareholders Shut Out

Welldex has excluded the electronic voting system, which was introduced at its last regular shareholders' meeting, from the upcoming extraordinary meeting. This appears to be a response to the defeat of the compensation ceiling proposal due to opposition from ordinary shareholders. The problem is that Welldex has not introduced a written voting system either. As a result, shareholders who have not delegated their voting rights in advance must attend the meeting in person at 9 a.m. on a Monday in Gumi, North Gyeongsang Province, to exercise their voting rights. This structure effectively blocks participation not only from individual investors but also from domestic and foreign institutional investors.

VIP Asset Management plans to directly participate in the meeting after collecting proxy votes from ordinary shareholders, actively exercising shareholder rights. Min Guk Kim, CEO of VIP Asset Management, stated, "A vote without sufficient opportunities for participation cannot avoid controversy over procedural legitimacy," and criticized, "Before resubmitting a proposal that has already been voted down, the company should present executive compensation standards that ordinary shareholders can accept and explain its approach to improving shareholder returns."

This content was produced with the assistance of AI translation services.