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Photo = Yonhap news |
[Alpha Biz= Paul Lee] The proportion of voting rights exercised by domestic asset management companies rose to 91.6% last year, marking an increase of nearly 12 percentage points from the previous year’s 79.6%.
According to a full review released on June 4 by the Financial Supervisory Service (FSS) on the “2024 Fiscal Year Voting Rights Exercise by Asset Management Companies,” the overall exercise rate among 273 asset management firms operating public and private funds was 91.6%, with a dissent rate of 6.8%. While these figures show notable improvement, they remain lower than those of major pension funds such as the National Pension Service, which recorded a 99.6% exercise rate.
The FSS pointed out formalistic practices and insufficient internal control systems in the voting rights exercise process. Some firms, including Company A, reportedly abstained from exercising voting rights on all agenda items for all holdings, citing the blanket reason that the proposals had “no significant impact on fund profits and losses.” The FSS criticized such blanket handling as inadequate fulfillment of fiduciary duties.
Poor management of conflicts of interest was another major concern. Certain asset managers affiliated with financial groups were found to have uniformly voted in favor of listed companies that had business dealings with their corporate finance affiliates, without clear internal guidelines. The FSS warned that “a structure where decisions are influenced more by group relationships than investor interests can undermine fiduciary responsibilities.”
Dependence on proxy advisory firms also remains high. Some asset managers reportedly outsourced all agenda items to a single advisory firm and accepted its recommendations without internal review, resulting in votes in favor of proposals that their own guidelines would have recommended opposing.
Repeated organizational infrastructure deficiencies were observed as well. Even some large asset managers lack dedicated teams for voting rights, with research or administrative staff taking on these duties concurrently, leading to recurring workload issues during peak shareholder meeting seasons.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
