Most Board Member Increases at JB Financial
BNK Proposes Governance Improvement Plan
DGB Regrets Reappointing Existing Directors
"Organizational Stabilization Needed"
Regional financial holding companies (BNK Financial, DGB Financial, JB Financial) completed the announcement of resolutions to convene shareholder meetings this month, with DGB Financial concluding on the 5th. All three companies had the most agenda items related to the appointment of outside directors, and in particular, BNK and JB Financial increased the number of board members in line with the financial authorities' recommended 'best practices for governance.' On the other hand, DGB Financial focused on stable management by reappointing all existing outside directors ahead of Daegu Bank's transition to a commercial bank.
According to the financial sector on the 7th, DGB Financial Group and JB Financial Group will hold their regular shareholder meetings on the 28th of this month. BNK Financial Group announced it will hold its regular shareholder meeting earlier, on the 22nd. All three companies will discuss and vote on the approval of last year's financial statements and the appointment of directors.
The company that increased its board size the most is JB Financial Group. It added two outside directors (Lee Heeseung, director of Leading Ace Capital, and Lee Myungsang, lawyer). These candidates were recommended by the 2nd and 3rd largest shareholders (Align Partners Asset Management and OK Savings Bank, respectively). The total number of outside directors increased from 7 to 9, and the total board size increased from 9 to 11. This is the largest scale among domestic financial holding companies.
There is also a possibility that JB Financial's board size will increase further. This could happen if the proposal to increase directors, put forward by Align, is approved in the shareholder meeting vote. JB Financial Group established a 'shareholder recommendation system for outside director candidates,' which allows shareholders who have held voting shares for more than six months, even just one share, to recommend outside director candidates. Accordingly, Align proposed increasing the number of outside directors, excluding the outside director who is a member of JB Financial's audit committee, to eight, and increasing the number of other non-executive directors to two. They also recommended five director candidates (Kim Kisuk, Jung Sujin, Kim Donghwan, Lee Namwoo, Lee Heeseung).
However, the board actively opposed this and sent letters to shareholders asking them to vote 'against' Align's agenda. Chairman Yoo Gwanwoo of the board stated, "Align's shareholder proposal regarding the appointment of outside and non-executive directors is an excessive demand," adding, "Although one new outside director candidate was accepted, demanding the appointment of multiple directors undermines the board's independence, fairness, and balance, and poses a risk of conflicts of interest."
BNK Financial Group increased its number of outside directors by one, raising the total board size from 7 to 8. However, although the board size increased, the number of female directors remained at one, lowering the proportion. Kim Suhee, the only female director in her 40s, was not reappointed.
They also introduced governance improvement measures. The term of the board chair was set to one year, with the possibility of one renewal. A new principle was established to appoint at least one new outside director every year. To strengthen the evaluation of outside directors, those who have served for more than two years will be evaluated through an external evaluation agency. The outside director evaluation system is set to be reviewed at least once every three years.
DGB Financial Group reappointed the three outside directors whose terms expired (Jo Gangrae, Lee Seungcheon, Kim Hyoshin). The board size did not increase. The female outside director remains Kim Hyoshin. However, DGB Financial proactively increased the number of outside directors from 5 to 7 at last year's shareholder meeting.
A DGB Financial Group official explained that the reappointed outside directors have only one-year terms, saying, "Since it takes some time to understand the work, this is a decision for board stabilization." They also explained that the organization supporting outside directors is already well established, as recommended by the financial authorities' 'best practices for governance.' Although DGB Financial Group has only two vice presidents, one of them serves as the board secretariat chief, and there are three staff members, which is more than other holding companies. Additionally, to promote gender diversity, they plan to increase the number of female outside directors within this year.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
