Disclosure of Management Succession Plan... National Pension Service to Decide at Fund Committee on 16th

[Asia Economy Reporter Park Ji-hwan] The National Pension Service (NPS) is reportedly set to discuss an agenda item at the final Fund Management Committee meeting of the year on the 16th, which includes the disclosure of management succession plans to the boards of investee companies.

According to the investment banking (IB) industry on the 10th, the NPS plans to report an agenda at the Fund Management Committee, the highest decision-making body, on the 16th, which contains standards related to the composition and operation of the boards of listed companies. Although this agenda was reported at the 8th Fund Management Committee meeting in October, it was subject to re-discussion due to opposition from some committee members.

The content reported by the NPS at the 8th Fund Management Committee includes requiring the board of directors to prepare and disclose a comprehensive and detailed succession plan, which covers the establishment of an organization responsible for CEO succession and procedures for CEO succession in emergencies or upon retirement. It also mandates that promotions and dismissals of executive officers who exercise management rights but are not directors, such as honorary chairpersons or chairpersons, must obtain board approval.

This agenda is an extension of the Stewardship Code (principle of fiduciary responsibility), introduced in July 2018 as a fundamental principle of shareholder activism, and the active shareholder rights exercise guidelines, including director dismissal and appointment, passed at the Fund Management Committee at the end of last year.

In response to the NPS's move to strengthen shareholder rights, the business community has expressed concerns that this represents excessively detailed and specific interference in management rights. According to FnGuide, as of the 9th, there are 282 domestic listed companies in which the NPS holds a stake of 5% or more. There are also 92 listed companies where it holds 10% or more.

A business community official pointed out, "No matter how much general principles are recommendations, from a company's perspective, it is not an easy decision to disregard the National Pension Service, which holds the second-largest stake after the major shareholder."

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