AllinPartners Enters JB Financial Board... Successfully Appoints 2 Outside Directors

The First Domestic Shareholder Proposal for Financial Holding Company Director Candidate Appointment
Proving the Importance and Effectiveness of the Cumulative Voting System

Activist fund Align Partners Asset Management has succeeded in entering the board of directors of JB Financial Group.

Align Partners Asset Management announced on the 28th that it succeeded in appointing outside directors Lee Hee-seung and Kim Ki-seok at JB Financial Group’s regular shareholders’ meeting.

In the vote on agenda item 3-1, the appointment of outside directors conducted by cumulative voting, shareholder-nominated candidate Kim Ki-seok received the highest number of votes, and Align’s recommended candidate Lee Hee-seung received the second highest number of votes, resulting in their appointments.

Regarding the shareholders’ meeting results, Align Partners stated, “This outcome holds significance beyond a simple director appointment,” adding, “The appointment of outside director Kim Ki-seok is the first case in the history of domestic financial holding companies where a director was appointed through a shareholder proposal.”

While there have been cases in domestic financial holding companies where candidates recommended by shareholders through a shareholder recommendation system were appointed as directors after board approval, this is the first time a shareholder directly submitted an agenda item to the shareholders’ meeting and, after a meaningful vote contest, a shareholder-proposed director candidate was appointed.

Align Partners said, “The successful appointment of directors through shareholder proposals symbolizes the end of an era in which management of widely held companies monopolized the right to recommend executives like an impregnable fortress.”

Although two directors alone cannot overturn board resolutions, the appointment of truly independent directors from management is expected to greatly improve the transparency of JB Financial’s board operations, they added.

In particular, Align Partners views this shareholders’ meeting result as a meaningful case demonstrating the importance and effectiveness of the cumulative voting system. It showed that minority shareholders can appoint independent directors proportional to their shareholding through cumulative voting, breaking away from the previous winner-takes-all director appointment method, which was a major factor in the Korea discount.

Despite JB Financial increasing the number of separately elected outside directors from one to four, thereby reducing the number of outside directors subject to cumulative voting, and despite various circumstances such as many overseas shareholders not properly participating in cumulative voting, Align Partners expressed gratitude, stating that thanks to the strong support of many investors for its campaign to resolve undervaluation of bank stocks, it was able to successfully appoint outside directors.

Newly appointed outside director Kim Ki-seok was appointed as an outside director through a shareholder proposal with the highest number of votes on his second attempt, after failing to be appointed despite 41% shareholder support at the 2023 shareholders’ meeting.

After his appointment, Director Kim said, “With the trust shown by JB Financial shareholders, I will strive even harder to enhance JB Financial Group’s shareholder value in line with the currently active domestic stock market value-up programs and the growing national interest in governance and shareholder value.”

Outside director Lee Hee-seung was appointed with the second highest number of votes and underwent the screening process of JB Financial’s executive candidate recommendation committee following Align Partners’ shareholder recommendation.

Align Partners expressed expectations that smooth discussions between Align Partners and JB Financial regarding improvements such as capital allocation and shareholder return policies will be possible following Lee Hee-seung’s appointment as outside director.

Regarding this, Director Lee stated, “Based on being chosen by shareholders through both shareholder proposal and company recommendation, I will focus on enhancing shareholder value and promoting the company’s sound growth, while fulfilling my role as an independent outside director in a balanced manner.”

Align Partners said, “With the appointments of outside directors Lee Hee-seung and Kim Ki-seok, JB Financial’s board has welcomed independent experts with excellent expertise in capital markets, corporate governance, and fintech (finance + technology). We expect continuous efforts to enhance shareholder value, such as improvements in JB Financial Group’s capital allocation and shareholder return policies in line with recent value-up trends, as well as governance improvements to prevent recurrence of issues like the Finda case involving mutual shareholdings.” They also expressed hope that these activities will bring positive changes to the domestic listed stock market and lead to enhanced rights and interests for all shareholders.