The National Pension Fund, Loud in Voice, Was Actually Blunt in Action

Appointment of Chairman Cho Hyun-joon as Inside Director and Other Proposals with Opposing Votes Passed Consecutively
Unlikely to See Major Surprises in Remaining General Meeting of Shareholders

[Image source=Yonhap News]

[Asia Economy Reporter Park Ji-hwan] This year, the voice of the National Pension Service (NPS) has not had a significant impact at regular shareholder meetings of companies. Despite the NPS casting opposing votes, the proposals submitted by companies were passed one after another.

According to the business community on the 24th, all proposals of companies against which the NPS cast opposing votes at shareholder meetings held until the previous day were passed as originally planned. On the 7th, the NPS declared that it would actively exercise its voting rights by changing the purpose of stock ownership from 'simple investment' to 'general investment' for 56 listed companies. Major conglomerates such as Samsung Electronics, SK Hynix, Hyundai Motor, and Korean Air were included in large numbers. In the case of nine companies including POSCO, KT&G, and Shinhan Financial Group, the tension remained high as the NPS is the largest shareholder. This is because corporate management could be greatly shaken depending on the influence of the NPS.

However, when the lid was actually opened, it was just an unfounded concern. At Hyosung's shareholder meeting on the 20th, the NPS cast opposing votes against the appointment of outside directors Cho Hyun-joon, Cho Hyun-sang, and former Minister of Culture Chung Dong-chae, but the proposals were passed as originally planned. Holding a 10% stake, the NPS opposed the appointment of Cho Hyun-joon as an inside director due to reasons such as a history of damaging corporate value and excessive concurrent positions. Cho Hyun-joon received a two-year prison sentence last year and has been evaluated by some as having damaged shareholder value.

At the Hana Financial Group shareholder meeting held on the same day, all seven outside director appointments and four audit committee member appointments opposed by the largest shareholder, the NPS (9.94%), were passed. At the shareholder meetings of BNK Financial Group, where the NPS is the largest shareholder, and Samsung Securities, where it is the second-largest shareholder, opposing votes were cast against the appointments of outside director Son Kwang-ik and inside director Sa Jae-hoon, respectively, but the proposals were passed as originally planned.

There are many forecasts that the NPS's exercise of voting rights will not cause major surprises at the remaining shareholder meetings. Attention is focused on whether the chairmen Son Tae-seung and Cho Yong-byeong will be reappointed at the shareholder meetings of Woori Financial Group and Shinhan Financial Group, held on the 25th and 26th. The NPS decided to cast opposing votes on the reappointment of these two chairmen due to a history of damaging corporate value and infringing shareholder rights. The NPS is the second-largest shareholder of Woori Financial Group (7.71%) following the Korea Deposit Insurance Corporation (17.25%) and holds a 9.38% stake in Shinhan Financial Group, making it the largest shareholder. However, since there are many friendly shareholders with stakes exceeding that of the NPS, the reappointment proposals of the two financial groups are expected to pass without difficulty.

The reason the NPS's shareholder rights have not been effective is largely due to its insufficiently overwhelming shareholding ratio. The company in which the NPS currently holds the largest stake is Mando, where it holds 14.34%, about half of the largest shareholder's stake (30.26%). The shareholding ratios of the seven companies where the NPS holds the largest shareholder status are also around 10%.

However, in matters with sharply divided opinions, the NPS's low shareholding ratio is expected to still allow it to play a casting vote role. The shareholder meeting of Hanjin KAL on the 27th is attracting attention for this reason. The main agenda is the appointment of Chairman Cho Won-tae as an inside director, with both Chairman Cho Won-tae's side and former Korean Air Vice President Cho Hyun-ah's side securing friendly stakes in the mid-30% range. Although the NPS's stake is not high at 2.9%, it is evaluated as a major variable in the sibling management dispute because it can influence other institutional investors and minority shareholders to some extent.

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