NongHyup Financial, CEO One-Year Short-Term Tenure Improved... 'Basic 2 Years + 2 Years Renewal'

[Asia Economy Reporter Jo Gang-wook] NH Nonghyup Financial Group has changed the customary one-year short-term tenure of its affiliate CEOs to a basic two-year term. Upon reappointment, the tenure can be guaranteed for up to four years.

According to the financial sector on the 25th, Nonghyup Financial recently held a board meeting and revised its "internal governance regulations" to improve CEO tenure to "basic 2 years + reappointment 2 years."

Article 38 of the revised internal regulations was amended to state that "in the case of the first appointment of a CEO, the term shall be two years, and in the case of reappointment, it shall be within two years." The previous regulation stated, "The initial term shall be within two years and reappointment is possible." This change guarantees a minimum tenure of two years. Reappointment is possible within two years, with no limit on the number of times.

Until now, Nonghyup Financial has granted CEO tenures on a one-year basis for five affiliates including Nonghyup Bank, Nonghyup Life Insurance, and Nonghyup Property & Casualty Insurance. As a result, even if reappointed, the tenure was only two years. This is quite different from most financial holding companies, where the basic CEO tenure is two years. Because of this, some criticism arose that the focus was more on short-term performance rather than a long-term perspective.

The Financial Supervisory Service (FSS) also pointed out this issue and issued a "management caution" to Nonghyup Financial. The FSS had recommended that Nonghyup Financial improve the practice of shortening the tenure to one year when recommending representatives for five subsidiaries including NH Nonghyup Bank, NH Nonghyup Life Insurance, and NH Nonghyup Property & Casualty Insurance since 2017.

Nonghyup Financial explained, "We revised the internal governance regulations reflecting the FSS's management caution."

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