Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Global pension funds side with activist investors at Samsung C&T
Norges Bank's sign is seen at the main entrance to its head office in Oslo, Norway, in this undated file photo. Courtesy of Norges Bank
By Park Jae-hyuk
Vote showdown looms large at shareholders' meeting on Friday
Public pension funds in Norway, Canada and the U.S. state of California rejected Samsung C&T’s request that its shareholders oppose City of London Investment, Whitebox Advisors and other hedge funds, which asked the Korean firm to repurchase treasury shares and increase dividends, their disclosures showed Wednesday.
In an early vote before Samsung C&T’s annual general meeting of shareholders on Friday, Norges Bank Investment Management (NBIM) supported a shareholder proposal for a 4,500 won ($3.4) dividend per common share and a 4,550 won dividend per preferred share, instead of the board’s plan to pay 2,550 won per common share and 2,600 won per preferred share.
The world’s largest sovereign wealth fund, which manages the Norwegian government pension fund, is presumed to hold around 0.8 percent stake in the Korean construction, trading and resort firm, which is considered Samsung’s de facto holding company.
NBIM voted not only for a shareholder proposal to acquire treasury shares worth 500 billion won but also for Samsung C&T’s plan to retire nearly 1 trillion won worth of treasury stocks.
These opinions were shared by the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS) and the Canada Pension Plan Investment Board (CPPIB), despite Samsung C&T’s claim that the shareholder proposals weigh heavily on the ability of the company to be managed effectively.
Their decisions came after Institutional Shareholder Services and Glass Lewis recommended Samsung C&T’s shareholders vote for proposals made by the activist funds.
In 2015, when Samsung pursued a controversial merger between Samsung C&T and Cheil Industries, most foreign institutional investors also followed the world’s two most influential proxy advisers’ recommendations to oppose the deal.
Regarding the appointment of directors, all four foreign pension funds voted against the reappointment of former Minister of Knowledge Economy Choi Jung-kyung as an outside director.
“Shareholders should have the right to seek changes to the board when it does not act in their best interests,” NBIM said.
A sign for Samsung C&T located outside of its building in Seoul in this 2022 file photo. Newsis
CPPIB even opposed the reappointment of Oh Se-chul, head of Samsung C&T’s construction division, and Lee Jun-seo, head of the company’s fashion division, as inside directors. The Canadian pension fund only voted for the appointment of Lee Jae-eon, who was nominated late last year as Samsung C&T’s head of trading division.
Both CalPERS and CalSTRS voted against the appointment of all director nominees. The latter also opposed the size of the compensation to be given to Samsung C&T’s directors.
However, it remains uncertain whether Samsung C&T will accept the shareholder proposals because the combined shares held by the four foreign pension funds and the group of activist investors are only estimated to be around 4 to 5 percent, which is far below the 33.63 percent stake held by Samsung Electronics Executive Chairman Lee Jae-yong and his allies.
KCC, which holds a 9.17 percent stake, is also expected to back Samsung C&T’s management.
In addition, the National Pension Service, which holds a 7.01 percent stake, is unlikely to agree with the foreign pension funds, given that the world’s third-largest pension fund, in terms of assets, voted for the merger of Samsung affiliates in 2015.