National Pension Service Holds Voting Rights Exercise Briefing for Listed Companies Association

About 300 Representatives from Korea Listed Companies Association Member Firms Attend
Explanation of Voting Rights Exercise with Various Cases

[Asia Economy Reporter Kwangho Lee] The National Pension Service (NPS) Fund Management Headquarters held a briefing session on detailed standards and cases for exercising voting rights ahead of the regular shareholders' meeting period. This was to communicate with stakeholders, enhance understanding of voting rights exercise, and strengthen the transparency of fiduciary responsibility activities.

On the 17th, the NPS Fund Management Headquarters held a briefing session on voting rights exercise standards and cases for members of the Korea Listed Companies Association at the Listed Companies Hall in Mapo-gu, Seoul. About 300 representatives from listed companies attended the event. The Fund Management Headquarters regularly holds such briefing sessions.

Dongseop Lee, Head of the Stewardship Responsibility Office at the National Pension Service Fund Management Headquarters, is holding a briefing session on voting rights exercise standards and cases for members of the Korea Listed Companies Association at the Listed Companies Hall in Mapo-gu, Seoul, on the 17th. (Photo by Kwangho Lee)

Previously, on the 13th and 16th, the NPS also held non-public meetings on voting rights exercise with 30 domestic equity delegated asset managers and two proposal analysis advisory institutions, respectively. This briefing session was held as a public meeting.

The NPS emphasized that it exercises voting rights solely for the stable growth of assets in accordance with the National Finance Act and fund management guidelines.

Lee Dong-seop, Head of the Fiduciary Responsibility Office at the NPS Fund Management Headquarters, said, “As a shareholder, the NPS exercises voting rights for the benefit of the fund in proportion to the number of shares it holds,” adding, “We vote in favor when it does not cause a decrease in shareholder value for all shareholders and does not go against the interests of the fund.”

He also mentioned cases of neutrality or abstention. He explained, “Among corporate merger and acquisition (M&A) proposals, there are cases where shareholders' appraisal rights arise. When there is a large gap between the appraisal price and the actual transaction price depending on the stock price, it is sometimes necessary to abstain to secure rights, even though the proposal itself is not one to oppose.”

Recently, the number of proposals on which the NPS exercises voting rights and the proportion of opposition have increased. The total number of proposals the NPS voted on last year was 3,439. Among them, the proportions of approval and opposition were 76.3% (2,625 cases) and 23.3% (803 cases), respectively. Since 2020, to alleviate concerns about the excessive influence of the NPS, the proportion of proposals exercised by delegated asset managers who have been entrusted with some voting rights has averaged around 42% over the past three years.

Lee said, “Since the NPS introduced the Stewardship Code in 2018, it has been actively exercising voting rights, so the number of cases is increasing. Although the investment proportion in domestic stocks is slightly decreasing, the amount is increasing as the fund size grows, so the number of proposals is expected to continue rising. This year, it is expected to be slightly higher or similar to previous years.”

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