Shareholders' meetings of major financial holding companies are being wrapped up one after another. The National Pension Service cast opposing votes on some items at recent financial holding company shareholders' meetings, but all passed as originally proposed. Recently, the financial authorities have been encouraging active intervention by the National Pension Service as a way to improve financial holding company governance, but questions are being raised about the effectiveness of such control.
According to the financial industry on the 27th, Woori Financial Group, Hana Financial Group, KB Financial Group, Shinhan Financial Group, JB Financial Group, iM Financial Group, and BNK Financial Group completed their shareholders' meetings this week. NH Nonghyup Financial Group is set to hold its shareholders' meeting on the 30th. The seven financial holding companies passed all key items at the meetings as originally proposed. As a result, following Woori Financial Group Chairman Yim Jong-ryong, Shinhan Financial Group Chairman Jin Ok-dong and BNK Financial Group Chairman Bin Dae-in also secured new terms.
The National Pension Service supported most items at the seven financial holding companies' shareholders' meetings but voted against some. At Shinhan Financial Group's meeting, it opposed the appointment of an inside director, saying Chairman Jin Ok-dong had a record of damaging corporate value and infringing on shareholder rights. However, the item passed with an 88% approval rate, and Jin succeeded in winning another term.
At KB Financial Group's shareholders' meeting, it opposed the item to approve the cap on directors' remuneration. It cited that the pay level was excessive compared with management performance, but the item passed with a 77% approval rate. The National Pension Service also opposed the remuneration cap approval item at iM Financial Group's meeting, but that, too, was approved with a 59.9% approval rate.
Recently, the government has been urging the National Pension Service to take a more active role in exercising voting rights. In Dec. last year, President Lee Jae-myung said to the National Pension Service, "You must properly exercise the voting rights on the stocks you hold. The Service holds authority on behalf of the people as shareholders. Even if (by participating in votes) it does not control the management of corporations, shouldn't it at least impose minimal controls so that no odd things happen?"
The financial authorities are also seeking to control financial holding companies through the National Pension Service. In Dec. last year, Financial Supervisory Service Governor Lee Chan-jin said, "We must ensure that nomination committees can maintain independence and operate fairly by diversifying the channels for recommending outside directors, such as recommendations by institutions representing all citizens, and by staggering outside directors' terms." The "institutions representing all citizens" remark is interpreted as referring to the National Pension Service. The view appears to be that although the National Pension Service, as a major shareholder in domestic financial holding companies, holds the right to recommend outside directors, it has effectively not been using it.
However, some say that the National Pension Service's involvement does not translate into real influence. According to corporate data research firm CEO Score, only 4% of the items actually failed after the National Pension Service exercised opposing voting rights on agenda items at investee companies' shareholders' meetings last year.
Lee Dong-seop, secretary-general of the Korea Corporate Governance Forum, said, "Although the National Pension Service is actively exercising its voting rights in line with policy direction, given the equity structure, I don't think it is easy for a single institution to sway whether an item passes."