"Corporate governance is a matter of life and death for companies, so we must explore various ways to strengthen the expertise of National Pension Service committee members."
Lee Nam-woo, chairman of the Korea Corporate Governance Forum, said in an interview with Seoul Economic Daily on March 2 that measures should be established to enhance the expertise of expert committees, including the NPS Stewardship Responsibility Committee, as Korea's capital market passes through major turning points such as the Commercial Act revision. He added, "There is a blind spot where optimal personnel selection is not achieved due to limitations in recommendations from professional organizations."
Lee's suggestion comes as personnel procedures for the three major expert committees—Stewardship Responsibility, Investment Policy, and Risk Management Performance Compensation—which handle core decision-making for NPS fund management, are now in full swing. The Ministry of Health and Welfare is currently finalizing personnel selection based on recommendations from labor and business groups.
"The most important role the Korean government can play in raising capital market valuations is through the NPS Stewardship Committee," Lee said. "While the committee doesn't determine governance issues for all companies, its decisions on important issues have the effect of sending signals to the market."
The Stewardship Committee reviews and decides on major matters related to responsible investment and shareholder rights exercise. Lee noted, "From the perspective of capital markets and companies, governance issues are the most important, so deep knowledge is required to make rational decisions. If you're not an expert, it will be difficult to actively voice opinions at committee meetings."
Lee also pointed to problems in the expert committee selection process. "Personnel recommendations come from professional organizations, and the Ministry of Health and Welfare makes final decisions, but no one knows how that process works," he said. "A governance problem of transparency arises again in the selection process for a committee that demands transparency in corporate governance."
From this perspective, he suggested that open recruitment to receive applications could be one way to select the best experts. "Foreigners hold 35% of our market, so there is also a need to diversify the people making decisions," Lee said, suggesting that foreign experts should also be considered.
The first cohort of full-time expert committee members, launched in 2020, conducts preliminary review and deliberation of fund management policy agendas across three expert committees: Investment Policy, Stewardship Responsibility, and Performance Evaluation Compensation. However, concerns about expertise and neutrality have frequently arisen. Controversy erupted when a Stewardship Committee member who decides NPS shareholder rights exercise was nominated as an outside director candidate for an NPS-invested company immediately after their term ended, eventually leading to resignation.