"The current management's investment decisions affected shareholder value, and the current board members should be responsible for the management accountable"

• "We believe Chul Whan Park, as an inside director, could well serve the responsibility of overseeing and supervising the current management and bring a good balance to the board."
• "Park provided an in-depth analysis over incidents that destroyed shareholder value and current management's poor capital investment decisions."
• "Outside directors failed to fulfill its role of supervising the current management and inside directors."

HONG KONG, March 19, 2021 /PRNewswire/ — Chul Whan Park (CW Park), a senior executive and the single largest shareholder of Kumho Petrochemical, welcomed the favorable recommendations from Sustinvest. Sustinvest is a leading Korean proxy advisor and ESG analytics & research institute, which released its analysis report today on Kumho Petrochemical's annual general meeting.

In its report, Sustinvest recommended Kumho Petrochemical shareholders to vote "FOR" all agendas proposed by CW Park:

(i) increase dividend payout of the Company (item 1-2-2);

(ii) separate the role of Chairman and CEO (item 2-2-1);

(iii) establish an Internal Transaction Committee and Compensation Committee and their terms of reference (items 2-2-2, 2-2-3 and 2-2-4);

(iv) appoint himself, Park Chul Whan, as an inside director (item 4-2); and

(v) appoint Rhee Byung Nam, Min John K, Benjamin Joe and Choi Jung Hyun as outside directors and Rhee Byung Nam and Min John K as audit committee members (items 3-2, 5-4, 5-5, 5-6 and 6-2).

With respect to the alternative inside directors, Sustinvest stated that in its view, CW Park could well serve the role of keeping the management in check and provide a good balance to the board, which are needed to define the long-term success and sustainability of the company.

Sustinvest also supported CW Park's proposal that the board chairman should be annually appointed among outside directors by board resolution, and said, "Even if an inside director other than CEO is allowed to take the chair position, as suggested by the company, he or she would not be completely free from the management's influence to make independent decisions."

Regarding the appointment of director nominees suggested by the company, Sustinvest recommended to vote "AGAINST," providing in-depth analysis over series of incidents where shareholder values were affected, as well as the capital investments decisions made by the current management.

Sustinvest also expressed deep concerns over the independency of the board. "The majority of directors on the current board are outside directors and instead of taking any actions to remove chairman Park Chan Koo who was sentenced to three years in prison and suspended for five years on charges by the Supreme Court of Korea, they nominated him as an inside director at the 2019 AGM. In our opinion, such malpractice by the management that undermines company's reputation will resurface."

Moreover, Sustinvest added that despite the company's outstanding operating performance throughout the years, it has long been undervalued due to sub-optimal capital structure and return policy. Sustinvest especially criticized excessive treasury stock holdings, low dividend payout, below the industry average CAPEX, and directors' compensation surpassing that of industry peers by threefold. The report insisted that the current board should be held accountable for failing to fulfill its supervisory role to monitor the management, inside directors in particular, and pointed out that "the absence of independent outside directors in the current board could be seen as the fundamental cause of its incompetence." In this regard, the report explained, the director nominees proposed by CW Park are better suited for the board in terms of their competence, eligibility, and independence.

Furthermore, the report indicated that excessive treasury stock holdings is one of the main causes of the undervaluation of the company, as it poses concerns among shareholders that treasury stocks may later be used for the benefit of the controlling shareholder. In order to resolve such market concerns and for a positive impact on shareholder value, Sustinvest stated that immediate retirement of treasury shares is necessary.

In regard to the Sustinvest's recommendations, Park commented that "It is great news to know that my shareholder proposals and plan calling for necessary transformation of Kumho Petrochemical are gaining wide support," and "over the course of this campaign, I have strengthened my determination to continue active communication with all fellow shareholders and strive for enhancement of long-term corporate value."

[Reference]

Sustinvest's Voting Recommendations on Annual General Meeting of Shareholders Agenda
*Highlighted agendas are proposed ones by shareholder, Chul Whan Park

Agenda	Details	SUSTINVEST's Recommendations
1.1	Approval of the 44th Financial Statements (excluding the Statement of Retained Earnings)	FOR
1.2.1	Dividend of KRW 4,200 per common share and KRW 4,250 per preferred share; provided, differential dividend in case of the largest shareholder, etc. (KRW 4,000 per common share)	AGAINST
1.2.2	Dividend of KRW 11,000 per common share and KRW 11,050 per preferred share (shareholder's proposal)	FOR
2.1.1	Separation of the CEO and the chairman of the board of directors (amend Articles 31 and 32 of the AOI)	AGAINST
2.1.2	Establishment of committees (ESG Committee, Internal Transactions Committee and Compensation Committee) within the board of directors (amend Article 34 of the AOI)	AGAINST
2.2.1	Separation of the CEO and the chairman of the board of directors (amend Articles 31 of the AOI) (shareholder's proposal)	FOR
2.2.2	Establishment of committees (Internal Transactions Committee and Compensation Committee) within the board of directors (amend Article 34 of the AOI) (shareholder's proposal)	FOR
2.2.3	Composition of the Internal Transactions Committee, etc. (newly add Article 35-5 to the AOI) (shareholder's proposal)	FOR
2.2.4	Composition of the Compensation Committee, etc. (newly add Article 35-6 to the AOI; amend Article 29 of the AOI) (shareholder's proposal)	FOR
3.1	Appointment of Yi Seok Hwang as an outside director who also becomes a member of the Audit Committee	AGAINST
3.2	Appointment of Byung Nam Rhee as an outside director who also becomes a member of the Audit Committee (shareholder's proposal)	FOR
4.1	Appointment of Jong Hoon Baek as an inside director	AGAINST
4.2	Appointment of Chul Whan Park as an inside director (shareholder's proposal)	FOR
5.1	Appointment of Do Sung Choi as an outside director	AGAINST
5.2	Appointment of Jung Mi Lee as an outside director	AGAINST
5.3	Appointment of Soon Ae Park as an outside director	AGAINST
5.4	Appointment of Min John K as an outside director (shareholder's proposal)	FOR
5.5	Appointment of Benjamin Joe (Yong Bum Cho) as an outside director (shareholder's proposal)	FOR
5.6	Appointment of Jung Hyun Choi as an outside director (shareholder's proposal)	FOR
6.1	Appointment of Do Sung Choi as a member of the Audit Committee who is an outside director	AGAINST
6.2	Appointment of Min John K as a member of the Audit Committee who is an outside director (shareholder's proposal)	FOR
7.0	Approval of directors' remuneration ceiling	FOR

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