National Pension Fund to exercise its veto power

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National Pension Fund to exercise its veto power

Korea’s state pension fund will vote against the appointments of some board members at banks and major companies during shareholder meetings, saying they are not qualified for the positions.

The National Pension Service (NPS) said its trust management committee has decided to object to the appointments of Woori Financial Group Chairman Sohn Tae-seung and Shinhan Financial Group chief Cho Yong-byoung as board members at the banks.

The pension service also said it will vote against the motion to give Hyongsung Group Chairman Cho Hyun-joon and the conglomerate’s CEO Cho Hyun-sang board membership.

The NPS has been seeking a greater say in companies it has invested in as part of its shareholder activism. The NPS is by far the largest institutional investor in the country and the third-biggest in the world.

In December last year, the NPS, which had 714.3 trillion won ($615.7 billion) in assets under its management as of the end of September, unveiled guidelines under which the pension fund would be able to actively exercise its stewardship and shareholder rights against companies that have been found to have committed serious crimes, like embezzlement or breach of trust.

The NPS can also demand the dismissal of corporate board members who are suspected of involvement in illegal activities and call for changes to a company’s articles of association, if needed.

Korea adopted the mandatory state pension program in 1988 to guarantee income for the elderly after retirement and to provide coverage for those with disabilities and surviving family members.

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