NPS Flexes Muscle, Opposing Executive Board Appointments

The National Pension Service is flexing its muscle by repeatedly opposing companies' executive director appointments. On the 19th, the NPS convened its Fiduciary Responsibility Committee and decided not to exercise its voting rights on the agenda item to appoint Choi Yun-beom, chairman of Korea Zinc, as an executive director. The pension fund effectively opposed his reappointment, citing his history of damaging corporate value and infringing on shareholder rights. For the same reasons, the NPS also decided to vote against the executive director appointments of Cho Yong-byoung, chairman of Shinhan Financial Group, and Cho Hyun-sang, vice chairman of HS Hyosung Advanced Materials. A proposed charter amendment by Hyosung Heavy Industries aimed at blocking minority shareholder-backed candidates from joining the board was also rejected due to NPS opposition.

The NPS's moves appear aligned with the Democratic Party of Korea's push to strengthen the stewardship code as a key initiative to revitalize the Korean stock market. The goal of enhancing shareholder value and improving corporate governance transparency is certainly understandable. However, it is also true that the business community has significant concerns about the NPS's across-the-board exercise of voting rights to block major corporate agenda items at recent shareholder meetings.

The biggest issue is that strengthening the stewardship code for the NPS, a public pension fund, could further constrain corporate management. With the passage of commercial law amendments that expand directors' fiduciary duties and mandate treasury stock cancellation to enhance shareholder returns, the burden on companies to defend their management rights has never been greater. Yet defense mechanisms common in advanced economies, such as dual-class shares or poison pills, are entirely absent here. With the NPS now actively wielding its voting rights, companies cannot help but feel anxious.

As of the end of 2025, the NPS has invested 263.7 trillion won in domestic stocks, making it the largest player in the capital market. Given its unparalleled influence among domestic institutional investors, the NPS needs to exercise caution when wielding voting rights that can sway corporate management. While the NPS has decided to gradually delegate domestic stock voting rights to private asset managers, the system is still in its early stages and needs to be implemented more swiftly. Above all, the NPS must not forget that its primary role is to serve as the ultimate safety net for citizens' retirement security by maximizing fund returns.