South Korea’s National Pension Service (NPS) vetoed one out of six corporate agendas put to vote in shareholders meetings last year, underscoring the more proactive role of the country’s top institutional player.

The NPS, which devotes about 20 percent of its 630 trillion won ($562.2 billion) of assets under management in Korean shares, attended 665 shareholders meeting last year. It had cast a vote of disapproval in 607 out of 3,713 agendas, or 16.3 percent of all votes, according to CEO Score, a local corporate evaluation site, on Wednesday.

The pension fund approved 83.2 percent of the cases and abstained on 0.4 percent.

The NPS has long been regarded as a white knight that large companies can rely on for protection against external threats. That has changed under the liberal administration as President Moon Jae-in vowed to enforce a stewardship code on institutional players to rein in the excesses of family-run chaebols. Stewardship code is a set of guidelines to prompt big institutional investors to push for better governance and higher shareholder returns in the companies they invest in.

The fund, falling under the jurisdiction of the Ministry of Health and Welfare, adopted the stewardship code last July. Its veto rate, which averaged 10 percent from 2013 to 2016, rose to 12.8 percent in 2017 and 16.3 percent last year.

About 27.3 percent of the fund’s rejection votes concerned executive compensation packages. Issues related to corporate articles accounted for 23.0 percent, appointments and removals 14.9 percent, and mergers and demergers 12.0 percent.

Some of the major deals the NPS voted down last year on “concerns over shareholder value” were Lotte Holdings’ plan to merge six non-listed affiliates, Yesco Co.’s demerger attempt to reorganize itself into a holding entity, and Kakao Corp.’s move to merge with its entertainment arm Kakao M. The three agendas nevertheless passed.

The NPS showed the highest veto rate in Hyosung, striking down four out of six shareholder proposals. It cast the most rejection votes in Lotte, refusing 19 out of 65 agendas.

By Yoo Joon-ho and Kim Hyo-jin

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