Shareholders of Korean conglomerates, in particular institutional investors, are becoming vocal about their voting rights in an effort to raise the bar on the qualification of board members at firms they have invested in.

“They are the most interested in getting advice on whether to vote for or against appointment of board members in the 2015 annual shareholders’ meetings,’’ said Kim Sang-yoon, an analyst of Sustinvest, an advisory firm for shareholder votes.

The trend is finally gathering steam in the Korean corporate world where shareholders have traditionally been onlookers or cheerleaders rather than a watchdog for management issues ― which enables companies to appoint or maintain disqualified standing or non-standing board members. 

Taking advantage of the long-held practice, companies used to fill director posts with owner family members, former policymakers, or lawmakers, based on cronyism.

“A growing number of investors want to act against the deep-rooted practice to protect shareholders’ value,’’ Kim said.

State-run National Pension Service has spearheaded shareholder activism this year. The nation’s largest investor announced on Wednesday it would oppose the reappointment of non-standing board members at Kia Motors and Hyundai Mobis, because they agreed with the extravagant land deal worth 10.6 trillion won ($9.4 billion) last September.

The two companies joined the Hyundai Motor-led consortium to finance the deal without asking for a feasibility study.

Industry watchers forecast that NPS’ decision would affect votes of other institutional investors at shareholders’ meeting of the two companies to be held this month.

Shareholders of other conglomerates, including Hyundai Steel, Lotte and POSCO, are also keen on the recommendations by advisory firms.

This year, Sustinvest recommended shareholders to vote against the reappointment of Hyundai Steel vice chairman Chung Eui-sun as a standing director.

“We are raising the issue of ethical management as Chung damaged shareholders’ value by violating the fair trade act in 2007,’’ Kim said.

The advisory firm doubted his competency on the steelmaker’s management issues, given he holds standing board membership at five other Hyundai Motor affiliates. ‘‘He seems to be overloaded,” the company reported.

Sustinvest raised the same issue regarding Shin Kyuk-ho, a standing director at Lotte Shopping. The 92-year-old Lotte Group chairman Shin currently serves 11 affiliates as a standing director.

The company proposed shareholders of POSCO to veto Park Byung-won, a non-standing director nominee, pointing out that he currently serves Doosan Infracore as an outside director.

“The commerce law put a ban on multiple outside directorship in principle being concerned about the conflict of interest,’’ Kim said.

By Seo Jee-yeon (jyseo@heraldcorp.com)