Amid government uncertainty, directors likely to stay put
Because the configuration of the incoming administration has been delayed, the new government’s position on personnel for the financial groups has not yet been determined. In such a situation, financial holding companies are minimizing replacements of the existing outside directors.
According to the Financial Supervisory Service (FSS) on Sunday, 28 of 34 outside directors at Woori, Shinhan, KB and Hana financial groups will finish their terms, but only about 10 will be leaving.
The outside director candidate recommendation committees run by each financial group plan to replace no more than three directors each.
In addition, as many as four outside directors will not be reappointed.
If no special disqualification is found among candidates reelected by the boards of directors, they will be confirmed to remain in office at general shareholders meetings at the end of next month.
According to current regulations, if the outside director candidate recommendation committee of each financial group extends the term of the outside directors by two years after their first term, they can hold office for a maximum of five years.
Woori Financial Group plans to approve extending the terms of five of seven outside directors on Feb. 25. The Korea Deposit Insurance Corporation is the group’s largest shareholder.
Outside directors of Woori Financial Group are expected to support chairman Lee Pal Seung, who recommended most of them as chairman of the board after he assumed his current position in 2008.
Shinhan Financial Group is expected to retain most of is outside directors at its meeting tomorrow. “All of the 10 outside directors should be reappointed as there is no director who has served five years,” said a spokesman for Shinhan Financial Group.
Rumors are flying that Yoon Kye-seop, honorary professor at the College of Business at Seoul National University who has been serving for four years, could be replaced, but observers say that it is unlikely.
Shinhan Financial Group also plans to maintain the positions of four Korean-Japanese outside directors.
KB Financial Group has eight outside directors, including Chairman of the Board Lee Kyung-jae, whose terms are expiring. However, except for Hahm Sang-moon, who has served for five years, most of them will remain.
“KB’s outside directors are very cohesive in that they shot down KB Financial Group Chairman Euh Yoon-dae’s bid to buy ING Life last year. Unless something major comes up, it is highly likely that the outside directors will recommend each other again this time,” said sources from KB Financial Group.
At Hana Financial Group, Kim Kyung-sup, Yoo Byung-taek and Lee Ku-taek have completed five-year terms as outside directors. The five other outside directors likely will be reappointed.
Hana Financial Group will have a meeting March 6 to select candidates for outside directors who then will be presented to the shareholders meeting March 27.
The financial industry is paying attention to how this postponement of the replacement of outside directors will affect the election of the next chairmen of these financial groups.
The chairmen of Woori Financial Group and KB Financial Group are supposed to be nominated by chairman candidate recommendation committees, which consist mainly of outside directors.
Lee Pal-seung, chairman of Woori Financial Group, will complete his term in office in March 2014, while Euh Yoon-dae, chairman of KB Financial Group, will finish in July.
“As President-elect Park Geun-hye pledged to eradicate all the appointments ordered by the government agency, the role of outside directors will increase when electing the new chairman,” an industry observer said.
By Lee Tae-kyung [firstname.lastname@example.org]
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