NPS' former key players move to law firms as its voting power increases

South Korea’s National Pension Service (NPS) is seeing more and more of its former senior managers moving to top-tier domestic law firms. There are growing concerns that the former staff may be representing either NPS’ portfolio companies or their activist funds, affecting the pension fund’s important decision-making process.

The pension fund’s former global fixed-income head Jung Jae-young recently moved to Kim & Chang, one of the largest law firms in Korea, according to banking sources on Thursday. His move followed NPS’ former investment strategy chief Park Seong-tae (Tae Park) and ex-responsible investment head Choi Sung-je to the law firm.

Including Choi, who led NPS’ introduction of stewardship codes in 2018, the three worked for the Special Committee on Responsible Investment at the world’s third-largest pension fund.

Other former employees of NPS moved to leading law firms Yulchon and Jipyong in 2022.

More law firms are striving to recruit ex-employees of NPS as the pension scheme, the largest institutional investor in Korea, is strengthening its influence over portfolio companies, according to sources.

Institutional investors’ votes on corporate agendas have become more important as shareholder activism in Korea has surged in past years.

As NPS increasingly expresses its opinions on the governance of companies that don’t have principal shareholders, including KT Corp. and POSCO Holdings Inc., more and more law firms are representing such companies to respond to the pension fund's requests, sources added.

Market insiders said that more law firms, through ex-employees of NPS, will increase their lobbying activities for the pension fund. Before the annual shareholders meeting of Hanmi Science last week, many law firms requested NPS’ responsible investment committee to review their legal advice on the pension fund’s voting rights, according to market insiders.

“A lot of law firms are struggling to build relationships with institutional investors’ responsible investment committees. The firms’ lobbying activities may affect the pension fund’s key decisions, which should be fairly made,” an industry official said.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com
Jihyun Kim edited this article.