[Edaily Reporter Kim Se-yeon ] The role of outside directors (independent directors) is growing in the appointment of chairmen of financial holding companies and chief executive officers (CEOs) of their affiliates. This comes as demands intensify for them to make independent judgments, shedding the stigma of being mere “rubber stamps” who agree to the reappointment of incumbents without significant dissent. #With KB Financial Group selecting Division Head Lee Jae-geun—rather than the incumbent chairman—as its next chairman candidate, the independence of boards of directors is expected to be a key factor in the series of financial sector CEO appointments scheduled for the end of the year.
According to the financial industry on the 14th, a total of 54 CEOs at five major financial affiliates—whose terms end at the end of this year—include 10 from KB Financial Group, 12 from Shinhan Financial Group, 13 from Hana Financial Group, 12 from Woori Financial Group, and 7 from Nonghyup Financial Group. Among them, the terms of KB Kookmin Bank President Lee Hwan-ju, Shinhan Bank President Jeong Sang-hyeok, Hana Bank President Lee Ho-sung, Woori Bank President Jeong Jin-wan, and NH Nonghyup Bank President Kang Tae-young will all expire simultaneously on December 31.
Next February, Lee Chan-woo, Chairman of NH Nonghyup Financial Group, will also complete his first term. Since NH Nonghyup Financial Group begins its management succession process three months before the end of a term, the selection of the next chairman is expected to begin in earnest starting at the end of this year.
Strengthening the independence of financial holding company boards of directors has emerged as a key issue in the recent restructuring of the financial sector’s corporate governance. Concerns have long been raised that, within financial holding companies, the incumbent chairman exercises direct or indirect influence over the appointment of outside directors, and that the board formed in this way then supports the chairman’s reappointment. This suggests that the problem lies not in long-term reappointments per se, but in a structure where the checks and balances between the CEO and the board do not function properly.
Recently, pressure surrounding this issue has intensified. President Lee Jae-myung publicly criticized the long-term tenures of financial holding company chairmen and the issue of closed corporate governance structures as a “corrupt inner circle” (a closed power group). Financial authorities are also pushing for corporate governance reforms to enhance board independence and the fairness and transparency of CEO appointment procedures.
The revised Commercial Act, which took effect last July, is also cited as a factor promoting change within boards of directors. It changed the existing term “outside director” to “independent director” and explicitly stipulated that such directors must perform their duties independently of inside directors and executive officers. The law goes beyond simply appointing external figures to the board; it explicitly mandates that these directors make judgments independent of management.
The selection of Lee Jae-geun as the next chairman of KB Financial Group is a symbolic example reflecting the prevailing atmosphere that emphasizes the independence of the board of directors. It is reported that during this decision-making process, members of the Chairman Candidate Recommendation Committee did not coordinate their opinions in advance regarding any specific candidate. Kim Dae-jong, a professor in the Department of Business Administration at Sejong University, stated, “I believe this decision was influenced by an atmosphere in which outside directors sought to make independent judgments without being biased toward a specific candidate or the incumbent chairman.” He added, “Rather than a phenomenon unique to KB Financial Group, this can be viewed as a trend spreading across the entire financial sector as financial regulators and the market emphasize transparency in the corporate governance of financial holding companies and the accountability of outside directors.”
This shift is expected to influence CEO appointments at financial institutions scheduled for the end of the year. In particular, the terms of CEOs at major financial holding company affiliates—including the heads of the five major banks—are set to expire one after another. Observers predict that boards of directors will conduct stricter evaluations of performance, future growth strategies, and leadership capabilities rather than routinely rubber-stamping the reappointment of incumbents.
At KB Financial Group, Lee Hong-gu (CEO of KB Securities), Koo Bon-wook (CEO of KB Insurance), Kim Young-sung (CEO of KB Asset Management), Bin Joong-il (CEO of KB Capital), and Seong Chae-hyun (CEO of KB Real Estate Trust) are set to complete their third-year terms, raising the possibility of replacements. Among Shinhan Financial Group’s major affiliates, Park Chang-hoon, President of Shinhan Card, is expected to be replaced, while at Woori Financial Group, some CEOs of affiliates with banking backgrounds are also expected to be replaced. At Hana Financial Group, CEOs of major subsidiaries—including Kang Seong-mook of Hana Securities and Seong Young-soo of Hana Card—are set to be considered for replacement. At Nonghyup Financial Group, seven executives, including Kim Hyun-jin, CEO of NH Venture Investment, are completing their terms.
However, some point out that “independence” should not be equated with making decisions that differ from those of the incumbent CEO. This is because even if an incumbent is reappointed, it can still be considered an independent judgment if the decision follows a thorough vetting process and discussion. Nor does the mere fact of opting for generational change prove the board’s independence.
Kim Yong-jin, a professor in the Department of Business Administration at Sogang University, pointed out, “It is more important to evaluate who can best foresee the future and lead the organization effectively than to simply vote objectively,” adding, “If the board of directors does not engage in a thorough discussion process regarding the succession plan, there is a high likelihood that it will, conversely, choose the worst possible outcome.”
According to the financial industry on the 14th, a total of 54 CEOs at five major financial affiliates—whose terms end at the end of this year—include 10 from KB Financial Group, 12 from Shinhan Financial Group, 13 from Hana Financial Group, 12 from Woori Financial Group, and 7 from Nonghyup Financial Group. Among them, the terms of KB Kookmin Bank President Lee Hwan-ju, Shinhan Bank President Jeong Sang-hyeok, Hana Bank President Lee Ho-sung, Woori Bank President Jeong Jin-wan, and NH Nonghyup Bank President Kang Tae-young will all expire simultaneously on December 31.
Next February, Lee Chan-woo, Chairman of NH Nonghyup Financial Group, will also complete his first term. Since NH Nonghyup Financial Group begins its management succession process three months before the end of a term, the selection of the next chairman is expected to begin in earnest starting at the end of this year.
Strengthening the independence of financial holding company boards of directors has emerged as a key issue in the recent restructuring of the financial sector’s corporate governance. Concerns have long been raised that, within financial holding companies, the incumbent chairman exercises direct or indirect influence over the appointment of outside directors, and that the board formed in this way then supports the chairman’s reappointment. This suggests that the problem lies not in long-term reappointments per se, but in a structure where the checks and balances between the CEO and the board do not function properly.
Recently, pressure surrounding this issue has intensified. President Lee Jae-myung publicly criticized the long-term tenures of financial holding company chairmen and the issue of closed corporate governance structures as a “corrupt inner circle” (a closed power group). Financial authorities are also pushing for corporate governance reforms to enhance board independence and the fairness and transparency of CEO appointment procedures.
The revised Commercial Act, which took effect last July, is also cited as a factor promoting change within boards of directors. It changed the existing term “outside director” to “independent director” and explicitly stipulated that such directors must perform their duties independently of inside directors and executive officers. The law goes beyond simply appointing external figures to the board; it explicitly mandates that these directors make judgments independent of management.
The selection of Lee Jae-geun as the next chairman of KB Financial Group is a symbolic example reflecting the prevailing atmosphere that emphasizes the independence of the board of directors. It is reported that during this decision-making process, members of the Chairman Candidate Recommendation Committee did not coordinate their opinions in advance regarding any specific candidate. Kim Dae-jong, a professor in the Department of Business Administration at Sejong University, stated, “I believe this decision was influenced by an atmosphere in which outside directors sought to make independent judgments without being biased toward a specific candidate or the incumbent chairman.” He added, “Rather than a phenomenon unique to KB Financial Group, this can be viewed as a trend spreading across the entire financial sector as financial regulators and the market emphasize transparency in the corporate governance of financial holding companies and the accountability of outside directors.”
This shift is expected to influence CEO appointments at financial institutions scheduled for the end of the year. In particular, the terms of CEOs at major financial holding company affiliates—including the heads of the five major banks—are set to expire one after another. Observers predict that boards of directors will conduct stricter evaluations of performance, future growth strategies, and leadership capabilities rather than routinely rubber-stamping the reappointment of incumbents.
At KB Financial Group, Lee Hong-gu (CEO of KB Securities), Koo Bon-wook (CEO of KB Insurance), Kim Young-sung (CEO of KB Asset Management), Bin Joong-il (CEO of KB Capital), and Seong Chae-hyun (CEO of KB Real Estate Trust) are set to complete their third-year terms, raising the possibility of replacements. Among Shinhan Financial Group’s major affiliates, Park Chang-hoon, President of Shinhan Card, is expected to be replaced, while at Woori Financial Group, some CEOs of affiliates with banking backgrounds are also expected to be replaced. At Hana Financial Group, CEOs of major subsidiaries—including Kang Seong-mook of Hana Securities and Seong Young-soo of Hana Card—are set to be considered for replacement. At Nonghyup Financial Group, seven executives, including Kim Hyun-jin, CEO of NH Venture Investment, are completing their terms.
However, some point out that “independence” should not be equated with making decisions that differ from those of the incumbent CEO. This is because even if an incumbent is reappointed, it can still be considered an independent judgment if the decision follows a thorough vetting process and discussion. Nor does the mere fact of opting for generational change prove the board’s independence.
Kim Yong-jin, a professor in the Department of Business Administration at Sogang University, pointed out, “It is more important to evaluate who can best foresee the future and lead the organization effectively than to simply vote objectively,” adding, “If the board of directors does not engage in a thorough discussion process regarding the succession plan, there is a high likelihood that it will, conversely, choose the worst possible outcome.”
