South Korea tightens financial group chair reelection rules

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South Korea plans to raise shareholder approval thresholds for financial holding company chairmen seeking reelection, but questions remain over whether the tougher rules will curb…

South Korea plans to raise shareholder approval thresholds for financial holding company chairmen seeking reelection, but questions remain over whether the tougher rules will curb the influence of incumbent executives, given the overwhelming support most have received in recent shareholder votes.

Under governance reforms unveiled Thursday by the government and ruling party, a chairman seeking a second term would need approval from at least two-thirds of voting rights represented at a shareholders’ meeting, as well as shareholders holding at least one-third of all issued shares.

For a third term or beyond, the threshold would rise to 75 percent of voting rights represented at the meeting and at least half of all issued shares. Currently, reelection requires a simple majority of voting rights represented and support from shareholders holding at least one-quarter of issued shares, regardless of the number of terms served.

However, an analysis by Maeil Business of 16 chairman appointment and reelection votes at seven financial holding companies since 2020 found that 13 had already secured approval rates of at least 75 percent.

Former KB Financial Group Chairman Yoon Jong-kyoo won 97.32 percent support for his third term in 2020, while JB Financial Group Chairman Kim Ki-hong received 99.72 percent backing for his third term last year.

Among chairmen reelected this year, Shinhan Financial Group’s Jin Ok-dong received 88 percent support, Woori Financial Group’s Yim Jong-yong 99.3 percent and BNK Financial Group’s Bin Dae-in 91.9 percent.

By contrast, former Shinhan Financial Group Chairman Cho Yong-byoung and former Woori Financial Group Chairman Sohn Tae-seung received 56.43 percent and 66.05 percent support, respectively, in 2020, below the proposed higher voting thresholds.

Regulators argue that the reforms will be effective because they also strengthen oversight of the nomination process before candidates reach a shareholder vote.

Board committees responsible for nominating…

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