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Korean Journal of Financial Studies 2012;41(1):93-124.
Published online February 28, 2012.
Proxy Voting Policy and Strategy for National Pension Service
Young S. Park, Jhin Young Shin, Kyung Woo Wee, Jae Hyun Lee, Jay M. Chung
국민연금 의결권 행사 개선 방안
박영석, 신진영, 위경우, 이재현, 정재만
Abstract
National Pension Service (NPS) has substantially increased its stock investment. For each domestically listed firm whose shares NPS holds, we measure the critical level of percentage of shares owned by those other than controling shareholders and NPS. This measure, called "critical probability" quantitatively measures the possibility that NPS might win in the proxy voting contest against the controling shareholders, and therefore its potential influence on the firms through proxy voting. The results show that although the possibility cannot be ruled out completely, it is very difficult for NPS to change the management or pass the important agendas in shareholders meeting against the controling shareholders` will. As of 2009, NPS has cast dissenting votes in approximately 20% of shareholders meetings, and the total number of agendas of dissenting votes represented 5~6% of agendas in the meetings. These percentages of dissenting votes are much higher than those of other institutional investors in Korea, which indicates that NPS has more forward looking view on corporate governance issues. The main suggestions for the improvement of proxy voting policies and strategies of NPS are as following. First, NPS must establish more concrete proxy voting guidelines and strategies since its investment on domestic stock will inevitably keep increasing at very rapid pace. Second NPS needs to decide the optimal level of share ownership and proxy voting policy on bank holding companies due to the recent change in banking law allowing NPS to own more than 9% of bank holding companies, Third, much debate on socially responsible investment of pension funds and institutional investors is in progress. NPS ought to set up the guidelines and strategies of its proxy voting taking into account of the elements of socially responsible investment. Finally, NPS also has increased its exposure to international stocks and proxy voting policy on them needs to be formulated.
Key Words: 국민연금,사회적 책임투자,의결권,임계확률,지배구조,Corporate Governance,Critical Probability,National Pension Service,Proxy Voting,Socially Responsible Investment
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