Introduction of Union-Recommended Outside Director System in Finance Sector Fails

KB Financial Employee Stock Ownership Association's Recommended Outside Director Candidate Rejected Due to Low Approval Rate

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] KB Financial Group's failure to appoint outside directors recommended by the employee stock ownership association has made it difficult to introduce the labor union-recommended outside director system in the financial sector this year.

According to the financial sector on the 22nd, KB Financial at the extraordinary general meeting of shareholders held on the 20th finally rejected the appointment agenda (items 3 and 4) of two outside director candidates recommended by the employee stock ownership association: Professor Yoon Soon-jin of Seoul National University Graduate School of Environmental Studies and Ryu Young-jae, CEO of Sustainvest. The approval rate for both agendas did not exceed 5%. Not only the KB Financial Group board of directors but also major shareholders mostly voted against it.

The KB Financial labor union also attempted to appoint labor union-recommended outside directors in 2017 and 2018 but failed due to strong opposition, and in 2019, the recommendation was voluntarily withdrawn due to conflicts of interest related to the recommended candidates.

In the financial sector, with the failure of KB Financial's employee stock ownership association to appoint outside directors, it is seen as difficult to introduce the labor union-recommended director system within the financial sector this year, which is in line with President Moon Jae-in's election pledge to appoint labor directors who directly participate in corporate decision-making processes.

Since three outside directors of Korea Asset Management Corporation (KAMCO) are due to expire on the 28th, there is a possibility of re-pushing the labor union-recommended director system soon, but expectations are low as the attempt to introduce the labor union-recommended director system in the first half of the year failed.

At the beginning of next year, Industrial Bank of Korea (IBK), which agreed to actively promote the labor union-recommended director system in cooperation with related organizations, is attracting attention as to whether it will introduce the system.

IBK is facing the expiration of the terms of two outside directors in February to March next year, and the labor and management have already agreed to actively promote the labor union-recommended director system in cooperation with related organizations. IBK President Yoon Jong-won and the IBK labor union agreed earlier this year on six agenda items, including the promotion of the labor union-recommended director system.

Woori Bank has also expressed its intention that the employee stock ownership association and labor union will steadily push for the recommendation of outside director candidates, so it is expected that once the remaining shares sale process is completed, the labor union's recommendation of outside director candidates will begin in earnest.