NPS Likely to Remain Neutral at Shareholders' Meeting in 2021
The National Pension Service (NPS) has begun a discussion on excluding Hanjin KAL from the targets of its management participation. The move appears to be aimed at distancing itself from the feud between the Hanjin Group chairman and his elder sister over the control of Hanjin KAL, the holding company of Hanjin Group. Analysts say that the NPS is likely to remain neutral at next year’s regular general shareholders' meeting where a vote showdown between the two sides will take place.
Members of the Trustee Responsibilities Committee of the NPS held a closed-door meeting on June 22 and discussed a plan to change the purpose of holding Hanjin KAL shares from "management participation" to "simple investment" or "general investment.”
The meeting was reportedly held due to concerns that if the NPS holds a stake for the purpose of participating in the management of Hanjin KAL, it could be embroiled in the sibling feud over control of Hanjin Group.
If the NPS changes its purpose of holding Hanjin KAL shares, Hanjin KAL will be excluded from the targets of NPS’ stewardship code. The NPS Fund Management Committee demanded at the company’s shareholders' meeting in 2019 that the late Hanjin Group chairman Cho Yang-ho be removed from its board of directors.
This has raised the possibility that the NPS will cast a blank ballot at the regular general shareholders' meeting in 2021 where a proxy battle will take place over management control. The NPS voted in favor of Hanjin Group chairman Cho Won-tae's plan to serve a second term as an in-house director at the 2020 general shareholders' meeting in March, helping Cho keep his managerial rights.
Currently, an alliance formed by the group chairman’s elder sister holds 44.85 percent of Hanjin KAL, which eclipses 41.40 percent held by the pro-Cho Won-tae side. Some predict that the third-party alliance may convene an extraordinary meeting of shareholders in September. In other words, if the NPS sits on the fence, it may become difficult for the pro-Cho Won-tae side to keep the management rights.
However, some experts say that exercising voting rights at a general shareholders' meeting and management participation are separate issues, suggesting that the NPS may decide to support chairman Cho in next year’s shareholders’ meeting as it did in March this year. As of the end of 2019, the NPS held a 2.9 percent stake in Hanjin KAL.