Life Asset Management Makes Shareholder Proposal for Stock-based Compensation at BNK Financial Group

For Directors

Life Asset Management has proposed that BNK Financial Group introduce a stock-based compensation scheme for its inside director (chairman) and outside directors. It explained that the goal is to align the interests of the board and shareholders in order to promote long-term corporate value enhancement. Life Asset Management is a major shareholder that holds about 4% of BNK Financial Group’s shares.

Life Asset Management announced on the 12th that it has submitted the introduction of Restricted Stock Units (RSUs) as an agenda item for the regular shareholders’ meeting of BNK Financial Group to be held next month. The core of this shareholder proposal is to allow the company, within a certain limit, to use treasury shares it holds and grant them to directors as long-term performance-based compensation.

RSU compensation will be granted separately from existing cash compensation. For inside directors, share price, return on equity (ROE), and the Common Equity Tier 1 (CET1) ratio will be set as vesting conditions, and RSUs will be granted based on each condition. If only one out of the three conditions is met, RSUs will be granted only for that single condition. For outside directors, RSUs will be granted only when both types of indicators are satisfied: management indicators such as total shareholder return and the CET1 ratio, and governance-improvement indicators such as the publication of a management succession report and shareholder communication.

Safeguards have also been put in place to prevent directors from sacrificing future value in pursuit of short-term performance just before retirement. In particular, during their term and for two years after leaving office, directors will not be allowed to pledge, sell, or transfer the shares they have been granted. To ensure ex post accountability, depending on the circumstances, the compensation committee may resolve to extinguish the right to acquire the shares, or to claw back the shares even after they have been delivered.

This shareholder proposal is meaningful in that it does not confront the board but instead strengthens compensation for the directors. Life Asset Management recently obtained a commitment from BNK Financial Group last month to introduce a shareholder-nominated outside director system, which it had long been demanding. It explained that this new shareholder proposal is the next step in enhancing BNK Financial Group’s corporate value and is based on the judgment that the interests of the board and shareholders now need to be aligned. If RSUs are introduced, granting shares to directors will provide them with an incentive to support the share price, and setting vesting conditions based on long-term performance is expected to encourage sustainable growth.

Nam Doowoo, Co-CEO of Life Asset Management, said, “To improve corporate governance, the independence of the board must be strengthened so that it makes decisions for shareholders, but at the same time, the interests of the board and shareholders must also be aligned,” adding, “Monitoring is important, but voluntary motivation is equally important.”

Kang Daekwon, Co-CEO of Life Asset Management, stressed, “BNK Financial Group, which had been the most undervalued financial holding company in Korea, will, on the occasion of this regular shareholders’ meeting, be reborn as the first financial holding company in Korea to introduce both a shareholder-nominated director system and a performance-linked stock compensation scheme, and as a company with the most advanced corporate governance.”

This content was produced with the assistance of AI translation services.