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| The lobby entrance of KB Financial Group's headquarters can be seen through a window in Seoul in this file photo. Korea Times file |
By Yi Whan-woo
The Institutional Shareholder Services (ISS), the world's largest proxy adviser, has recommended shareholders of KB Financial Group vote against the nomination of an outside director endorsed by the group's labor union, according to industry sources, Thursday.
The ISS' advice came ahead of the annual shareholders' meeting that is scheduled for March 24. If disapproved by shareholders, it will mark the sixth time since 2017 that KB's union failed to get an outside director they endorsed.
On Jan. 30, KB's union recommended Lim Gyeong-jong, who formerly headed Koexim Mandiri Finance co-owned by Export-Import Bank of Korea (Eximbank) in Seoul and Pengelola Investama Mandiri Indonesia in Jakarta, as a candidate for the outside director position.
Accordingly, it submitted a proposal and a letter that authorizes shareholders to decide on Lim's candidacy on its behalf to the KB board of directors.
"And after going over the proposal, ISS said it does not find Lim's expertise cited by the union convincing enough that it can contribute to shareholders' interests," a source said.
The union said Lim is "a figure who has a deep understanding of the banking industry and is also capable of carrying out the job in a fair and objective manner."
In particular, the union highlighted Lim as "the right man to bolster the sales capability and normalize management" of KB Bukopin, a subsidiary of KB Kookmin Bank in Indonesia.
KB Kookmin Bank is the Korean banking group's flagship affiliate.
The ISS' advice is not legally binding. Regardless, KB Financial Group said it is "paying attention to such advice" considering the proxy firm's international reputation and its influence on shareholders.
The ISS also recommended KB shareholders vote against the KB union's demand, which was purportedly aimed at preventing a politically-appointed chairman.
The union said the group should revise its policy and add a new clause that bans any retired bureaucrats who served in the government for the past five years from being appointed as the group's chairman for the following three years.
The demand is in line with growing public concerns over parachute appointees, a term used to describe pro-government and pro-ruling party figures who are appointed in high-level posts at multiple financial institutions, often despite their lack of expertise in the field.
"However, the ISS saw that the union did not provide sufficient evidence in its claim that the government has been trying to influence the group's management," a source said.
The last time the ISS was recommended to vote against a KB union-backed outside director nominee was in 2022.
Back then, former Eximbank Vice President Kim Young-su was picked as the nominee but failed to win shareholders' approval.
Placing more union-backed directors in firms was a key election pledge of former progressive President Moon Jae-in. The plan, however, failed to bear fruit in a majority of the industries here.
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