NPS turns more vocal on management affairs in Korean Inc.

The Korean Inc. can no longer expect the National Pension Service (NPS) to be their reliable white knight, as the institutional major, which has sizable interests in most big publicly trading companies, turned more proactive in exercising its shareholder rights ahead of formally adopting the stewardship code in July.

The pension fund said Monday it attended 625 shareholders meetings held in the first quarter and cast votes on 2,561 agendas. Of them, it threw votes of approval for 79.2 percent, disapproval for 20.5 percent, and abstention for 0.3 percent.

The NPS in the past took part in shareholder meetings out of formality and mostly went along with the management decisions. Veto ratio averaged at around 10.0 percent from 2013 to 2016 and rose to 12.8 percent in 2017.

Strengthening the stewardship code in institutional players to check the excesses of chaebols had been one of the campaign pledges of President Moon Jae-in who was elected in May 2017.

About 43.5 percent of rejections went to proposals to increase the compensations for board directors and auditors. Another 42 percent of disapproval was also board and auditor-related out of concerns for their neutrality in management decisions. About 8.2 percent voted down on changes to the corporate articles.

The NPS is expected to turn more proactive once it adopts the stewardship code in July.

Stewardship code is a set of guidelines to encourage big institutional investors to push for better governance and higher shareholder returns in the companies they invest in, a move aimed to help ease the “Korea discount” in stock markets caused by low dividend payouts and poor corporate governance.

With the introduction of the new guideline, the NPS intends to make its fund management more transparent by disclosing all of its holdings in Korean stocks. It has so far only shared details on stock portfolio where it owns 5 percent or more.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]