EXCLUSIVE Glass Lewis sides with POSCO Holdings instead of NPS
The POSCO Center building in southern Seoul is seen in this Feb. 8 file photo. Yonhap
National Pension Service Chairman Kim Tae-hyun / Newsis
Glass Lewis, one of the world’s two most influential proxy advisers, recommended shareholders of POSCO Holdings to defy the stance of the National Pension Service (NPS), the biggest shareholder, at a regular general meeting of shareholders on March 21, a report showed Tuesday.
The proxy adviser's recommendation to vote for all director nominees, including chairman nominee Chang In-hwa, went directly against the stance of the head of the NPS, which holds the largest stake of 6.71 percent in the holding firm of steelmaker POSCO.
On Feb. 28, NPS Chairman Kim Tae-hyun raised doubts about a proposal to reappoint two non-executive directors — former Environment Minister Yoo Young-sook and former Public Procurement Service Administrator Kwon Tae-kyun — citing market criticism about their attendance at extravagant overseas trips funded by POSCO affiliates, under the pretext of holding board meetings in countries where the affiliates are operating.
Regarding The Korea Times' request to show its stance on the external directors, Glass Lewis sent the newspaper its report, Monday, which read: “Having reviewed the nominee list, we do not believe there are substantial issues for shareholder concern.” The report has not been updated since its Feb. 25 publication, meaning the proxy adviser has not changed its stance after Kim showed a negative opinion about the two nominees.
The head of the state pension fund told reporters that there were doubts about whether the two external directors had carried out their duties independently and without any conflicts of interest, citing their participation in the company’s expenses-paid board meetings overseas, which are currently under police investigation.
He criticized the management of POSCO Holdings for nominating them without addressing the doubts prevalent in the market. The company has refrained from responding to such criticism, with the NPS chief asserting that his opinion is "personal."
Former Environment Minister Yoo Young-sook, left, and former Public Procurement Service Administrator Kwon Tae-kyun / Korea Times files
However, his remarks were widely interpreted as the pension fund’s intention to vote against the reappointment of the two directors.
If Glass Lewis maintains its stance, most institutional and foreign investors, such as BlackRock and GIC, are also expected to vote for the director nominees, even if NPS, which has invested 148 trillion won ($110 billion) into listed companies in Korea, votes against them.
In 2021, when the pension fund opted to remain neutral on the reappointment of POSCO Group Chairman Choi Jeong-woo, both Glass Lewis and Institutional Shareholder Services, another prominent proxy adviser, recommended shareholders to vote for his reappointment. This recommendation led institutional and foreign investors to heed their advice.
Glass Lewis also highlighted the trips funded by POSCO affiliates as one of the concerns shareholders should take into account. Additionally, the proxy adviser referenced the ongoing investigation into the outgoing chairman, involving allegations of his personal use of company vehicles and violations of the Occupational Safety and Health Act concerning POSCO Future M, the group's chemical unit.
“We do not feel that any action is necessary at this time,” the advisory firm said, although it acknowledged that shareholders should remain vigilant about any lawsuits or regulatory investigations involving the company.
“We will continue to monitor the proceedings going forward,” it added.