'Stepping Back' National Pension Service... Final Corporate Investment Guidelines Eased

[Asia Economy Reporter Park So-yeon] The National Pension Service (NPS) has removed references to interim and quarterly dividends from the final draft of its corporate investment 'guidelines' and also deleted the recommendation that honorary chairpersons or chairpersons who are not registered directors must obtain board approval to perform their duties. This is interpreted as a slowdown in response to criticism of excessive interference in corporate management.

On the 3rd, the NPS held the 9th Fund Management Committee meeting and finalized the "Responsible Investment Direction Explanation Document on the Composition and Operation of the Board of Directors of Companies Invested by the National Pension Fund," which included these agenda items. In the final draft, 12 out of the 26 detailed principles specified in the initial draft were revised.

Regarding shareholder policies, detailed provisions related to interim and quarterly dividends, consistency of shareholder return policies, and total shareholder return were deleted. In terms of governance and voting rights, the sentence stating "defensive measures against hostile takeovers or mergers and acquisitions should not be used to protect management and the board" was also removed. The clause requiring the establishment of a dedicated organization to monitor internal transactions was deleted as well.

The guidelines related to management were also relaxed. The phrase "The board of directors shall endeavor to establish and disclose a specific and comprehensive CEO succession plan that includes the composition, operation, authority, and responsibilities of the CEO succession organization, self-evaluation of the efficiency of the organization's operation, performance evaluation of senior management, CEO succession procedures in emergencies or upon retirement, and training systems for executives and candidates" was simplified to "The board of directors shall endeavor to establish and disclose a succession policy that includes CEO succession procedures in emergencies such as the CEO's incapacity or upon the CEO's retirement." The recommendation that honorary chairpersons or chairpersons who are not directors must obtain board approval to perform their duties was excluded from the final draft.

Additionally, the wording requiring the separation of the CEO and the chairperson of the board was softened to "it is desirable to separate." The disqualification condition for directors, previously limited to "those with a history of damaging corporate value or infringing shareholder rights," was expanded to include "those for whom a certain period has not elapsed." The audit committee, which was to be composed entirely of outside directors, was revised to require "at least two-thirds outside directors."