Leadership Changes and Outside Director Appointments Draw Attention... Watchful Eye on Whether National Pension Service Will Cast Opposing Votes

4 Major Financial Holding Companies' Annual General Meeting Relay

[Asia Economy Reporter Song Hwajeong] The four major financial holding companies are holding their regular general meetings of shareholders simultaneously on the 24th and 25th, drawing attention to the results. In particular, issues related to governance, such as the appointment of new chairpersons and directors, are considered the biggest focus of this shareholders' meeting season.

According to the financial sector on the 23rd, Shinhan Financial Group will start on the 24th, followed by KB Financial Group, Hana Financial Group, and Woori Financial Group holding their regular shareholders' meetings on the 25th.

The most attention at this shareholders' meeting is focused on Hana Financial Group, which is changing its head for the first time in 10 years. This is because Vice Chairman Ham Young-joo is scheduled to be appointed as the successor to Chairman Kim Jung-tae. Earlier this month, the Hana Financial Chairman Recommendation Committee (Chairman Recommendation Committee) exclusively recommended Vice Chairman Ham as the next chairman, and the agenda to appoint Vice Chairman Ham as an inside director was submitted to this shareholders' meeting. However, since Vice Chairman Ham lost a lawsuit on June 14th related to the cancellation of disciplinary action over the incomplete sale of overseas interest rate-linked derivative-linked funds (DLF), it has become difficult to predict the voting results of the shareholders' meeting. Previously, Woori Financial Group Chairman Sohn Tae-seung was acquitted on the same issue, so it was expected that Vice Chairman Ham would also resolve the judicial risk, but the result was different. In addition, the world's largest proxy advisory firm ISS has recommended a dissenting opinion, drawing attention to how this will affect the votes of foreign investors.

KB Financial has nominated Kim Young-soo, former Vice President of the Export-Import Bank, as an outside director candidate, marking the first time a labor union-recommended director has been nominated by a private financial company. The KB Financial labor union has continuously recommended outside director candidates since 2017 but was repeatedly rejected by shareholders. Woori Financial Group plans to submit an agenda to newly appoint Lee Won-duk, the newly appointed Woori Bank President, as a non-executive director. Along with this, for the first time since transitioning to a holding company, a female outside director will be appointed. ISS recommended opposition to the nomination of former Vice President Kim by the KB Financial labor union, stating that the reasons for his appointment as an outside director were not convincingly explained, and has also expressed opposition to the appointment of Lee Won-duk.

While the financial holding companies are burdened by ISS's opposition recommendations, they are also closely watching whether the National Pension Service will exercise its voting rights against the proposals. As of the end of last year, the National Pension Service is the single largest shareholder of KB Financial (9.05%), Shinhan Financial Group (8.78%), and Hana Financial Group (9.19%), and holds the second-largest stake in Woori Financial after the employee stock ownership association. The National Pension Service's Stewardship Responsibility Committee has already decided to vote against the reappointment of five outside directors at Shinhan Financial's shareholders' meeting. The exercise of voting rights for KB Financial, Hana Financial, and Woori Financial Group will be decided at the meeting on the 24th.

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