중앙데일리

Institutions No Longer Investment Pussycats

Feb 20,2001
Institutional investors plan to exercise their rights as shareholders actively, an about-face from their former "shadow voting" behavior of the past, analysts said recently.

Insurance firms and pension funds have begun to compile hit lists of companies, in which they hold stakes, that they intend to question for business irregularities in the next general shareholders meetings, most of which will be held in mid-March.

Those lists will include firms that performed short of expectations this year and companies that are suspected of illegal stake-trades between their major shareholders. Also on the list will be firms that devalued their stocks through the granting of stock options to employees or through issuance of convertible bonds.

The institutional investors said they would act collectively if they hold just small stakes in firms. "We will attend stockholders' meetings of about 100 companies this year," an official at Korea Investment Trust Management Co. said. "We have discussed with Daehan Investment Trust Management taking measures jointly against firms with poor performances and companies suspected of illegal interaffiliate trades."

The official said that the investment firm will examine closely financial statements by SK Corp., a petroleum chemical company, and Korean Air because they both sustained big losses from last year's decline in the value of the Korean won against the dollar. The company has also targeted Cheil Jedang, which conducted big interaffiliate support.

Hyundai Investment Trust Management Co. plans to attend shareholders meetings of 117 companies in which the investment firm holds at least a 0.5-percent stake. A company official said that the firm will demand higher dividends from companies such as Samsung Electronics in which it holds more than a 5-percent position. "We will pressure the companies suspected of illegal share trading between large shareholders," the official said. "And we will demand that companies disclose dividend ratios."

Insurance firms like Samsung Life Insurance also plan to express their opinions and actively exercise voting rights in general shareholders meetings.

But Korea's institutional investors' activity in the meetings are still limited compared with the United States, where institutional investors often lead votes that result in changes in the heads of companies. A market observer said that institutional investors could increase their influence by creating a committee to integrate their information and collect their opinions.


by Chung Jae-hong




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