NPS to vote against chiefs of Shinhan, Woori, Hyosung

The National Pension Service, South Korea’s public pension fund, said Thursday it would disapprove of the chiefs of Shinhan Financial Group, Woori Financial Group and Hyosung as board directors in their respective shareholders meetings in March.

The decisions came as the pension fund overseeing 736.7 trillion won ($576.7 billion) has moved to ramp up shareholder activism and exercise its voting power to keep large corporations in check as a minority shareholder.

The NPS’ nine-member special committee on fiduciary responsibility said the world’s third-largest pension fund would use its 9.76 percent voting rights to vote against Shinhan Chairman Cho Yong-byoung’s second term as an inside director. As for the 8.82 percent of votes it holds in Woori Financial, the NPS will exercise the rights to oppose Chairman Sohn Tae-seung’s plan to extend his term.

The NPS cited Cho and Sohn’s responsibility in “undermining corporate value and violating shareholders’ rights.”

Both decisions came in line with the proxy advisory Institutional Shareholder Services’ reported disapproval, ahead of shareholders meetings next week.

As for the family-controlled Hyosung’s shareholders meeting Friday, the NPS announced that it would vote to oppose the firm’s plan to keep Chairman Cho Hyun-joon and his younger brother Cho Hyun-sang in their posts as inside directors, also in line with the ISS recommendation. The NPS holds 10 percent of the group’s holding company.

The NPS said Hyosung Chairman Cho had a record of sabotaging corporate value, had failed to monitor such actions and had served for too long.

These were among 14 items discussed by the NPS fiduciary duty committee.

This decisions also come as signs showed that the NPS has been actively engaged in the corporate decisions of its portfolio companies. The public pension fund approved its shareholder engagement guidelines in December to pursue transparency and impartiality for the sake of market predictability. Since then, NPS has sought to voice itself concerning dividend payouts and executive salaries for at least 56 companies.

By Son Ji-hyoung (consnow@heraldcorp.com)