The National Pension Service (NPS), the largest institutional investor in South Korea, has become more active in exercising its voting rights at shareholder meetings of companies it invests in after the adoption of the stewardship code in 2018, a study showed Tuesday.

Leaders Index, a corporate data researcher, analyzed the shareholder meetings of 216 listed companies that belong to large business groups from 2020 to 2022 and studied the cases in which the NPS exercised its voting rights on.

Over the three years, 4,768 agendas were dealt with at 737 regular and ad-hoc shareholder meetings, and the NPS voted against 577 motions, or 12.1 percent out of the total. Only 24 motions, or 4.2 percent of them, were actually voted down in the end.

The analysis showed that the NPS voted against 16.1 percent of the entire motions last year, up 6.9 percentage points from 9.2 percent in 2020.

Its veto rate jumped considerably in the last three years but fewer motions resulted in a full dismissal.

The denial rate stood at 1.5 percent, or only four out of 265 motions, in 2022, down from 7.3 percent in 2021 and 5.4 percent in 2020.

The NPS voted in favor of 83.6 percent of the motions, down 6.6 percentage points from 90.3 percent during the same period. It abstained on 0.3 percent of the motions, down from 0.5 percent.

The veto rate was the highest on issues related to compensations of the board members and auditors at 26.4 percent, followed by issues related to mergers and business transfers at 11.5 percent, and appointments of board members and auditors at 10.6 percent.

By Pulse

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