"Candidate Kim is an Overseas Business Expert"
[Asia Economy Reporter Park Sun-mi] Ahead of the March shareholders' meeting, the KB Financial Union is pushing for the appointment of union-recommended outside directors. This is the first move in the private financial sector following the passage of the amendment to the Public Institution Management Act (PIMA), which introduces the labor director system in public institutions, in the National Assembly.
According to the financial sector on the 18th, the KB Financial Union announced at a press conference that it will propose a shareholder proposal recommending Kim Young-soo, an overseas business expert, as a candidate for outside director. KB Financial plans to elect new outside directors whose terms expire at the regular shareholders' meeting at the end of March. Among the seven outside directors whose terms expire in March, one has completed the maximum reappointment term of five years, so at least one new outside director must be elected at this shareholders' meeting.
The union stated, "The management has repeatedly rejected outside director recommendations through shareholder proposals, which have been pushed four times since 2017, on the grounds that the procedures set by the board of directors were not followed," criticizing it as "a double standard of composing outside directors only with individuals who suit their preferences." Regarding the recommendation of candidate Kim, they explained, "There is no overseas business expert among KB Financial's outside directors, but Kim is an overseas business expert who has served as a standing director at the Korea Overseas Investment Infrastructure & Urban Development Corporation and as a vice president at the Export-Import Bank of Korea."
In response, a KB Financial board official said that they have never rejected shareholder proposals as the union claims, stating, "According to Article 363-2 of the Commercial Act (shareholder proposal rights), the proposal was properly submitted as an agenda item for the shareholders' meeting, but it was rejected due to opposition from shareholders."
Labor Directors to Appear in Public Institutions in the Second Half of the Year
Union-Led Initiatives Also Stirring in Private Financial Firms
In the financial industry, following the success of the Korea Export-Import Bank in September last year as the first financial institution to appoint a director recommended by the union, and the passage of the PIMA amendment in the National Assembly on the 11th of this month granting labor representatives the right to participate in corporate boards at 131 public institutions starting in the second half of the year, it is expected that union-recommended director systems will gain momentum in private financial firms as well.
In particular, KB Financial is the only private financial firm where the union and the employee stock ownership association have consistently attempted to recommend outside director candidates from 2017 to 2020. This is why other financial firms are closely watching KB Financial's moves.
This atmosphere may also expand to private financial firms in general, including Woori Financial Group, where the employee stock ownership association is the largest shareholder after successful privatization. Although IBK Industrial Bank of Korea is a policy bank, it is classified as another public institution and thus excluded from the PIMA, but its union is also pushing for a union-recommended director system in line with the shareholders' meeting scheduled for March.
However, the prevailing view is that it will not be easy for the 'first' union-recommended director appointment to emerge in private financial firms. This is because management and foreign shareholders have strong negative perceptions, citing that union participation in management could cause delays in swift decision-making and spread labor-management conflicts within the board. A representative from a commercial bank said, "Labor directors will appear in financial public enterprises from the second half of the year, but in private financial firms, opposition is so strong that the union's efforts to recommend outside director candidates are unlikely to lead to successful director appointments."
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