PFRDA

Pension funds could shift power away from chaebol chairman to

Summary: 한겨레 The mood is good for the funds exercising their vote but it depends on government s will By Kim Jae seob Staff Writer Kwak Seung joon head of the Presidential Council for Future and Vision said Pension funds should actively use their shareholders rights in large companies In response Samsung Electronics Chairman Lee Kun hee openly said Sunday that he welcomed such a move Hana Financial Group Chairman Kim Seung yu also said at a morning press conference that as shareholders pension funds rights should be respected The mood is more accepting of pension funds exercising their vote It appears repercussions will continue as the interests of chaebol major family run conglomerates whose corporate structure is opaque and the pension funds cannot help but clash The fact that chaebol company stockholders are not treated like the owners is not a new problem With less than 5 percent of the capital chaebol heads have used their personnel decision making power to determine the presidents and executives of subsidiaries before general stockholder meetings are held They do not attend the stockholder meetings It is also the same case with the executives They have regarded the will of the chairman as more important than that of the stockholders This is because it is the chairman who really controls the company due to knotty and complex capital relationships such as circular finance Coming primarily from civic organizations calls for strengthening the voice of stockholders have been ongoing A typical example is groups like Solidarity for Economic Reform SER getting minority shareholders together to attend general stockholder meetings An official in the business sector said While such moves have yet to change results the law and structure is changing to strengthen the voice of minority shareholders such as allowing class action suits and imposing fines The minority stockholder movement however has been unable to escape a certain limit due to their limited capital This is because pension funds which have as much capital as the head of the company have not moved If the pension funds move the situation will definitively change The National Pension Service NPS has drawn great interest this year by opposing the re electing of Hyundai Motor Chairman Chung Mong koo and SK Chairman Choi Tae won to their companies boards of directors at general stockholders meetings claiming the men had hurt the value of their companies through unfairly supporting subsidiaries and keeping two sets of books Moreover with pension funds increasing the ratio of their holdings over time their voice is expected to increase gradually The Lee Myung bak administration has created an economic climate favorable to the chaebol through low interest rates and high exchange rates Despite this the administration has reportedly expressed disappointed not only by the chaebols having shown no intention to pursue shared growth with small and medium enterprises SMEs but also by criticism from Lee Kun hee who said the government s economic policies have just avoided a failing grade It is for this reason that Kwak s comments are of such significance Commission on Shared Growth for Large and Small Companies Chairman Chung Un chan s push for a system that would take a certain portion of the profits of major corporations and use it for shared growth is along the same lines The key is whether the Lee administration has any level of intention to actively exercise the voting rights of pension fund holders If this was just a short term exercise in bringing companies to heel than this is likely to be an isolated event If Lee administration possesses a concrete intent however the situation is likely to change The administration can restrain the companies to some extent while avoiding criticism that they are twisting the companies arms Lee Kun hee said I am not especially concerned and in fact I welcome the open exercise of stockholders rights This development however are likely not good news for the chaebol heads Economic groups like the Federation of Korean Industries FKI have expressed their vehement opposition even using the term pension socialism However if the NPS and other pension funds actively use their voting rights there is nothing anyone can do to stop them Ultimately it all depends on the will of the government Please direct questions or comments to englishhani hani co kr 공식 SNS 통하니 트위터 미투데이 | 구독신청 한겨레신문 한겨레21 Copyrights ⓒ 한겨레신문사 무단전재 및 재배포 금지 한겨레 The mood is good for the funds exercising their vote but it depends on government s will By Kim Jae seob Staff Writer Kwak Seung joon head of the Presidential Council for Future and Vision said Pension funds should actively use their shareholders rights in large companies In response Samsung Electronics Chairman Lee Kun hee openly said Sunday that he welcomed such a move Hana Financial Group Chairman Kim Seung yu also said at a morning press conference that as shareholders pension funds rights should be respected The mood is more accepting of pension funds exercising their vote It appears repercussions will continue as the interests of chaebol major family run conglomerates whose corporate structure is opaque and the pension funds cannot help but clash The fact that chaebol company stockholders are not treated like the owners is not a new problem With less than 5 percent of the capital chaebol heads have used their personnel decision making power to determine the presidents and executives of subsidiaries before general stockholder meetings are held They do not attend the stockholder meetings It is also the same case with the executives They have regarded the will of the chairman as more important than that of the stockholders This is because it is the chairman who really controls the company due to knotty and complex capital relationships such as circular finance Coming primarily from civic organizations calls for strengthening the voice of stockholders have been ongoing A typical example is groups like Solidarity for Economic Reform SER getting minority shareholders together to attend general stockholder meetings An official in the business sector said While such moves have yet to change results the law and structure is changing to strengthen the voice of minority shareholders such as allowing class action suits and imposing fines The minority stockholder movement however has been unable to escape a certain limit due to their limited capital This is because pension funds which have as much capital as the head of the company have not moved If the pension funds move the situation will definitively change The National Pension Service NPS has drawn great interest this year by opposing the re electing of Hyundai Motor Chairman Chung Mong koo and SK Chairman Choi Tae won to their companies boards of directors at general stockholders meetings claiming the men had hurt the value of their companies through unfairly supporting subsidiaries and keeping two sets of books Moreover with pension funds increasing the ratio of their holdings over time their voice is expected to increase gradually The Lee Myung bak administration has created an economic climate favorable to the chaebol through low interest rates and high exchange rates Despite this the administration has reportedly expressed disappointed not only by the chaebols having shown no intention to pursue shared growth with small and medium enterprises SMEs but also by criticism from Lee Kun hee who said the government s economic policies have just avoided a failing grade It is for this reason that Kwak s comments are of such significance Commission on Shared Growth for Large and Small Companies Chairman Chung Un chan s push for a system that would take a certain portion of the profits of major corporations and use it for shared growth is along the same lines The key is whether the Lee administration has any level of intention to actively exercise the voting rights of pension fund holders If this was just a short term exercise in bringing companies to heel than this is likely to be an isolated event If Lee administration possesses a concrete intent however the situation is likely to change The administration can restrain the companies to some extent while avoiding criticism that they are twisting the companies arms Lee Kun hee said I am not especially concerned and in fact I welcome the open exercise of stockholders rights This development however are likely not good news for the chaebol heads Economic groups like the Federation of Korean Industries FKI have expressed their vehement opposition even using the term pension socialism However if the NPS and other pension funds actively use their voting rights there is nothing anyone can do to stop them Ultimately it all depends on the will of the government Please direct questions or comments to englishhani hani co kr 공식 SNS 통하니 트위터 미투데이 | 구독신청 한겨레신문 한겨레21 Copyrights ⓒ 한겨레신문사 무단전재 및 재배포 금지

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