KCC Glass, the only publicly announced key management company by the National Pension Service, is expected to soon escape the special management constraints of major investors. The National Pension Service has publicly raised concerns about the appropriateness of this company's executive compensation, but at this year's shareholders' meeting, it changed its stance to vote in favor, unlike in previous years. The establishment of an independent compensation committee by KCC Glass is interpreted as responding effectively to the requirements of the National Pension Service.
On the 20th, the National Pension Service's Fiduciary Responsibility Committee (Fiduciary Committee) held its 5th meeting to deliberate on the voting directions for agenda items at the shareholders' meeting of nine companies in which the National Pension Service is a major shareholder. Among them, the National Pension Service decided to cast a favorable vote for all agenda items regarding KCC Glass. This also included the matter of approving the limit on director compensation.
It is reported that not all nine commissioners of the Fiduciary Committee were positive about the agenda on the limit of director compensation for KCC Glass. Nevertheless, in the voting among the commissioners, supportive opinions constituted the majority. As of the end of 2024, the National Pension Service holds 6.87% equity in KCC Glass.
This decision has drawn attention because the National Pension Service designated KCC Glass as a publicly managed key management company last April due to concerns about the appropriateness of executive compensation limits at this company. At that time, the National Pension Service stated that 'the reasons for selecting it as a publicly managed key management company have not been resolved, despite conducting non-public conversations in 2023.'
When the National Pension Service determines that there are issues with the dividend policy, compensation limits for executives, corporate value, or shareholder rights of the invested corporations, it initially communicates with the respective corporation privately for up to one year. If there is no improvement, it transitions to a non-public key management company for an additional year of dialogue. If issues remain unresolved, it changes to a publicly managed key management company and subsequently raises pressure through shareholder activities such as shareholder proposals.
The National Pension Service voted against the agenda for approval of the limit on director compensation at the KCC Glass regular shareholders' meeting for three consecutive years from 2022 to 2024. As focused management continued, KCC Glass began to respond to the demands of the National Pension Service. A typical example is the establishment of a compensation committee led by three outside directors last July, which took charge of evaluating the performance and compensation policy of internal directors. A KCC Glass official noted, 'We actively engaged in dialogue with the National Pension Service.'
Given that the National Pension Service has changed its position, there is a growing likelihood that KCC Glass will soon be removed from the list of publicly managed key management companies. The National Pension Service stated, 'If there are changes in the status of publicly managed key management companies, we will disclose them according to regulations,' while being reserved in their comments.
However, the fact that 86% of the total compensation paid to the five registered executives of KCC Glass last year was concentrated in Chairman Jung Mong-ik, and that despite a significant decrease in operating profit, the bonuses received by Chairman Jung actually increased, will continue to be a topic of controversy. Last year, the proxy advisory firm, The Good Corporate Governance Research Institute, pointed out KCC Glass's 'excessive compensation payments to majority shareholders.'
In 2024, KCC Glass paid a total of 4.187 billion won in compensation to its five directors. A total of 192 million won was paid to three outside directors, while 3.995 billion won was allocated to two internal directors. Among the internal directors, Chairman Jung Mong-ik received 3.586 billion won, and CEO Byeon Jong-oh received 409 million won. KCC Glass reported an operating profit of 57.974 billion won last year, a decrease of 39% compared to the previous year. The bonus received by Chairman Jung increased from 205 million won in 2023 to 216 million won in 2024.