The National Pension Service said Wednesday it would engage in voting for Posco Chairman and CEO Choi Jeong-woo’s new term as a Posco board member in a way that does not affect the result of the shareholders’ vote on Friday.

The decision not to vote against Choi comes as a series of workplace accidents, the company‘s involvement in a coal-fired project and alleged ties to Myanmar‘s military coup piled pressure on Choi, who served as chief of the steel-to-chemicals conglomerate and has been an inside board member since 2018.

The largest public pension fund in South Korea, overseeing 833.7 trillion won ($730 billion) in assets, decided to take a neutral stance for its 11.1 percent of Posco voting rights, or nearly 9.7 million common shares, in the forthcoming annual meeting of shareholders. NPS is currently the biggest single shareholder of Posco, followed by BlackRock, Vanguard and Samsung Life Insurance.

Following its stance, NPS will cast its vote in proportion to the other voters in favor of, or opposing, another three-year term for Choi. The incumbent chairman needs to win a majority among voters who cast their ballots.

NPS said its nine-member subcommittee dedicated to the NPS’ fiduciary responsibility on Tuesday has taken into account the ongoing legislation that holds management accountable for industrial disasters, but noted the issues surrounding Choi do not clearly constitute a reason to disapprove of him under the current internal voting guidelines.

A total of 14 workplace deaths have occurred since Choi taking the chairman post in July 2018. Eight of them have been confirmed as industrial accidents by the Labor Ministry.

The passage of the Severe Accident Corporate Punishment Act, to be effective from January 2022, highlights the need to watch for negligence of the top businessman that could undermine the corporate value, said NPS in a statement.

Other than the agenda surrounding Choi’s second term, along with Posco‘s proposal to increase remuneration, the NPS’ subcommittee approved to vote in favor of the other nine agenda items during the Posco annual meeting.

In the meantime, local civic groups earlier in March filed a complaint against Choi, along with 63 Posco executives, for insider trading. Choi is accused of using confidential information to buy 615 Posco shares in March 2020, before the announcement of Posco’s share buyback plan in April.

Posco said the decision to buy back shares was made with urgency as institutional shareholders requested it in April, after Choi’s stock purchase took place.

Choi was holding 1,526 shares of Posco as of March 2020.

The NPS in February 2020 announced that it would exercise its voting right of Posco as a “general investor,” meaning it may propose to revise a target company’s articles of association to improve corporate governance and influence dividend payouts and executive salaries.

Posco is one of over 80 listed companies in Korea of which the NPS is a blockholding general investor. The pension fund oversees 176.7 trillion won in Korean listed shares.

While the decision is likely to pave the way for the incumbent Posco chairman‘s seat in the boardroom, Choi is likely to remain plagued by other issues.

Posco’s joint venture in Myanmar is suspected to have provided financial support to the military coup, while Posco and its subsidiary Posco Energy are taking part in Korea‘s final coal-fired power plant project in Samcheok, Gangwon Province.

By Son Ji-hyoung (consnow@heraldcorp.com)