National Pension Service Blocks Reappointment of Outside Directors at Financial Holding Companies

Opposition to Reappointment of 'Jangsu' Outside Director
Hana Financial Has Directors Serving for 8 Years

The National Pension Service (NPS) has expressed opposition to the reappointment of long-serving outside directors at financial holding companies. This decision is based on the judgment that these directors have failed to properly fulfill their roles, including neglecting their monitoring duties.

On the 24th, the NPS Fund Stewardship Committee held its 4th meeting the previous day and decided to oppose the appointment of outside directors on the agenda of the first shareholder meetings this year for KB Financial Group, Woori Financial Group, and Hana Financial Group. The NPS is the largest shareholder of KB Financial Group and Hana Financial Group, holding 7.94% and 8.78% of shares respectively. It holds 6.84% of Woori Financial Group shares, making it the second-largest shareholder after the employee stock ownership association.

The NPS decided to oppose the appointment of outside director and audit committee member Jeong Chan-hyung at Woori Financial Group’s shareholder meeting, citing negligence in monitoring duties. Mr. Jeong has served as an outside director at Woori Financial Group for four years since 2018. The NPS also plans to oppose the new appointment of outside director and audit committee member Ji Seong-bae, CEO of IMM Investment (Chairman of the Korea Venture Capital Association), due to concerns over conflicts of interest.

The NPS will also voice opposition to the appointment of outside directors at Hana Financial Group. It plans to oppose the reappointment of outside directors Kim Hong-jin, Heo Yoon, Lee Jeong-won, and Yang Dong-hoon, as well as the reappointment of audit committee member Heo Yoon, again citing negligence in monitoring duties. Heo Yoon, a professor at Sogang University Graduate School of International Studies, is the longest-serving outside director within the financial holding company, having served 8 years (3 years at Hana Bank and 5 years at Hana Financial Group). According to the Financial Companies Governance Act, outside directors can serve up to 9 years at financial holding companies and their affiliates. The NPS opposed the attempt to fully utilize the legally allowed tenure. The other outside directors opposed by the NPS?Kim Hong-jin, Yang Dong-hoon, and Lee Jeong-won?have also served as outside directors at Hana Financial Group and its affiliates for 5 years.

The NPS also opposed the appointment of outside directors at KB Financial Group, but for somewhat different reasons. It opposed the appointment of outside director Lim Gyeong-jong, citing doubts about whether the appointment of a labor union-recommended executive would enhance overall shareholder value. The NPS also opposed amendments to the articles of incorporation that could excessively restrict the qualifications of the CEO.

However, although the NPS has decided to cast opposing votes, it is uncertain whether the reappointment of the long-serving outside directors will be halted. Despite being the largest shareholder, the NPS does not hold enough shares to unilaterally decide the agenda. The first shareholder meetings of the three financial holding companies will be held at 10 a.m. today.