1分6合

Kumho Petrochemical Chairman Park Chan-koo, left, and his nephew, former Senior Vice President Park Chul-whan / Korea Times files

By Park Jae-hyuk

The National Pension Service (NPS) decided to vote in favor of a proposal from Kumho Petrochemical's management at its general meeting of shareholders, Friday, to side with Chairman Park Chan-koo against his nephew, former Senior Vice President Park Chul-whan, according to industry officials, Thursday.

The pension fund has been considered to have a casting vote at the general meeting of the petrochemical company's shareholders, as its chairman and his nephew were running neck and neck in their competition to take control of the company.

As of March 21, the NPS held a 6.71 percent stake in Kumho Petrochemical.

The Kumho Petrochemical chairman and his allies collectively own around a 15 percent stake, while the nephew and his allies are estimated to hold a combined 10 percent stake.

During the previous year's general meeting of shareholders, the NPS sided with the uncle.

Given that the world's two largest proxy advisers ― Institutional Shareholder Services (ISS) and Glass Lewis ― advised Kumho Petrochemical's shareholders to vote for the proposals from its management, the NPS was expected to support the chairman once again.

The nephew, however, urged the state pension fund to back him this year in order to enhance shareholder value, claiming that most retail investors supported him.

"In 2021, the NPS announced its support for my appointment as inside director, but in the end, it also voted for a candidate recommended by management, not just for me, virtually abstaining from voting," he said in a press release. "For the sake of 10 million retail investors in Korea, I hope the NPS will side against the company, playing its role for the company's further development."

He emphasized that Norges Bank Investment Management, the country's sovereign wealth fund holding a 1.5 percent stake in Kumho Petrochemical, decided again this year to support him, and that local proxy advisers ― the Korea Corporate Governance Service (KCGS) and Sustinvest ― recommended shareholders vote for his proposals.

In addition, the former senior vice president raised questions about Kumho Petrochemical management's recommendation of former NPS trustee committee member Park Sang-soo as a new outside director, saying that he was embroiled in controversy in 2019 for voting for the reappointment of then Korean Air Chairman Cho Yang-ho, despite the pension fund's objection.

During Kumho Petrochemical's general meeting of shareholders in 2016, the pension fund opposed its chairman's reappointment as CEO, citing his alleged embezzlement and other malpractices.

It also objected to the chairman's reappointment as an inside director in 2019.