The National Pension Service Fund Management Division said on the 12th that starting with the regular shareholders meeting in Mar., it will actively exercise its voting rights, including, in principle, voting against agenda items that run counter to the intent of the amended Commercial Act.
In particular, it plans to closely examine whether the basis provisions for retaining or disposing of treasury shares without canceling them infringe on shareholder rights and interests.
The National Pension Service Fund Stewardship Responsibility Special Committee (Stewardship Committee) held its fourth meeting that day and discussed this course of action.
The Fund Management Division noted that despite the amendment to the Commercial Act, some corporations have included agenda items for this year's regular shareholders meetings that circumvent the amended law, such as newly establishing or reducing limits on the number of directors or the number of auditors in their articles of incorporation.
It also explained that the agendas include items that do not sufficiently protect the rights and interests of general shareholders, such as preparing basis provisions in the articles of incorporation to retain or dispose of treasury shares for management purposes without considering the equity structure.
The Stewardship Committee said it will actively exercise voting rights to enhance shareholder value and increase fund profitability and signaled that it will, in principle, oppose agenda items such as those that run counter to the intent of the Commercial Act amendment.
Regarding the basis provisions for retaining or disposing of treasury shares without canceling them, it said it will exercise voting rights after reviewing the corporations' equity structures (the possibility of the largest shareholder alone approving at the shareholders meeting) and ways to reflect the opinions of general shareholders.
Meanwhile, the Stewardship Committee selected Hyosung TNC as a "public priority management corporation" regarding the appropriateness of the cap on executive compensation.
The National Pension Service determined that Hyosung TNC's per-person cap on compensation for internal directors is excessive and, since 2023, has designated Hyosung TNC as a target for private dialogue and as a private priority management corporation. However, it judged that sufficient improvement had not been made despite efforts to encourage voluntary changes.
For Hyosung TNC's shareholders meeting scheduled for the 18th, the Stewardship Committee decided to oppose an amendment to the articles of incorporation that would set director qualifications as "a person who has received recommendations from at least one-third of the directors in office on the date of the shareholders meeting to appoint directors."
As the reason, it cited that it may run counter to the intent of the amended Commercial Act, which seeks to increase board diversity by raising the likelihood that candidates from general shareholders can be elected.
Regarding the agenda item to appoint Hyosung Group Chairman Cho Hyun-joon as a director, it decided to oppose it on the grounds that he is "a person with a record of damaging corporate value or infringing on shareholder rights and interests."
It also decided to vote against the agenda item approving the cap on director compensation, citing the failure to improve it to an appropriate level over the past two years.