August 23, 2019

Namyang Dairy rejects NPS’ calls for dividend increase

PUBLISHED : February 12, 2019 - 16:59

UPDATED : February 12, 2019 - 16:59

  • 본문폰트 작게
  • 본문폰트 크게
  • 페이스북
  • 트위터
  • sms

Namyang Dairy has rejected the National Pension Service’s calls to raise dividend payouts this week in a development that could hinder its position as a major shareholder as it tries to uphold the stewardship code.

NPS has refused to approve Namyang Dairy’s financial statements since 2016, taking issue with its low dividends. In May last year, it said it has placed the dairy firm on its blacklist alongside Hyundai Green Food, a Hyundai Department Store subsidiary.


Namyang said in a statement on Feb. 11 that “raising dividends would result in further indulging the company’s owner family and those closely acquainted, who hold a combined 53.85 percent stake.”

Defending its low dividend policy, the company said it “plans to build up cash reserves by keeping the low dividend payout ratio” which it claims has helped “boost corporate value and operate debt-free.”

“NPS, with a 6.15 percent stake, cannot represent the rights and interests of the majority of shareholders,” it noted.

Contrary to its claims, however, the company has the least investment expenditure in the food industry. For the past five years, having invested 77 billion won (US$68.49 million), while its chief rival Maeil Dairies spent 180 billion won during the same period.

Namyang, while still retaining a significant market share, has been subject to a nationwide boycott for displaying questionable corporate integrity in a series of scandals including abuse of employees, products containing harmful substances and exploiting franchises, among others. Chairman Hong Won-sik received a 100 million won fine for tax evasion in April last year.

In keeping with the stewardship code -- guidelines for increased fiduciary role at invested firms -- NPS has recently stepped in to exercise its shareholder rights over Korean Air and its holding company Hanjin KAL.

Market watchers say the country’s biggest institutional investor has set itself up for tough challenges. In order to revise the corporate article as per NPS’ request, an approval of over a two-thirds majority at the annual shareholders meeting is needed.

NPS, as the world’s third-largest pension fund, has some 635 trillion won in assets under management, and holds over 5 percent stake in 297 listed firms in Korea, including Samsung Electronics, SK Hynix, Hyundai Motor and Naver.

By Kim Arin (

  • 페이스북
  • 트위터
  • sms
Herald Corporation|CEO : Kwon Chung Won
Publisher. Editor : Kwon Chung Won
Chief Privacy Officer & Juvenile Protection Manager : Yang Sung-jin
Title : The Investor|Date of registration : 2015.04.28
Company Registration No. 104-81-06004
Mail-Order Business Registration 2016 - Seoul Yongsan - 00590
Huam-ro 4-gil 10, Yongsan-gu, Seoul, Korea
T : +82-2-727-0114|Business info
Gov’t registration No. Seoul 아04099