In a word Nak-yeon Lee, re-discussed with the recommendation of outside directors at the National Pension Service, POSCO, and Financial Group

Input 2021.02.16 15:41 | Revision 2021.02.16 17:28

The National Pension Trustee Responsibility Committee is discussing on the 16th an agenda to propose outside directors to seven companies including POSCO. It seems that the previous day, Nak-yeon Lee, the leader of the Democratic Party, asked the National Pension Service to “enforce the stewardship code (institutional investors’ investment responsibility principle) properly to POSCO.”

This meeting is a place to re-discuss what has already been concluded after two meetings. It is unusual for the commission to discuss an issue three times. For this reason, it is evaluated that the national pension is not guaranteed to be independent from the political world.

On this day, the National Pension Commission is reviewing the agenda for recommending outside directors to 7 companies at the National Pension Service in Seodaemun-gu, Seoul, from 2:30 pm. This is the third time since the Fund Management Committee discussed related agendas at the first meeting last month and requested that the trustees review them.

Previously, 7 members of the Fund Committee, led by lawyer Lee Chan-jin, had to recommend outside directors by the National Pension Service at the general shareholders’ meeting in March for up to 2 companies out of 7 companies with ESG (environmental, social and governance) issues at the first meeting of the Fund. Presented the agenda.

Target companies are POSCO, CJ Logistics (poor industrial accident management), Samsung C&T (weak corporate governance), Woori Financial Group, Shinhan Financial Group, KB Financial Group, and Hana Financial Group (responsible for private equity).

At that time, the fund committee could not draw a conclusion and handed over the review of related procedures to the trustee. Subsequently, after two meetings, the Trustees concluded that the shareholders’ activity to immediately recommend outside directors at the general shareholders’ meeting in March is contrary to the official procedure for the trustee responsibility of the National Pension Service. At the meeting, it was reported that there was a controversy between the labor recommendation committee and the management recommendation committee.

According to the National Pension Fund’s Guidelines for Responsibility Activities for Trustees of Domestic Stocks, the National Pension Service manages the problem companies step by step:’Company subject to private conversation → Private priority management company → Public priority management company. Usually, a year is given for each step and the company is asked to establish an action plan and improvement measures. If there is no room for improvement after a total of three years have elapsed, active shareholder activities begin.

When an unexpected concern arises, the company can be selected as a target for closed conversation after a materiality assessment. Even in this case, an improvement period of usually one year should be given. If there is no company’s willingness to improve, the National Pension Plan will begin active shareholder activities.

The targets of active shareholder activities are classified according to the stage of the company that some members of the Fund Committee have questioned. Although the stage to which each company belongs is not known, it is reported that the commission has concluded that in fact, these companies are not subject to shareholder activities.

However, the controversy reignited in the political world. At a meeting of the Supreme Council of the Democratic Party on the 15th, Lee Nak-yeon, the representative of the Democratic Party, said, “POSCO has become a target of blame for industrial accidents, occupational diseases, and environmental pollution.” “We demand that the institutional investor’s investment responsibility principle be properly implemented.”

A member of the trustee said, “The Foundation requested that the Committee review the related contents once more.”