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IBK likely to appoint union-backed outside director

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Industrial Bank of Korea CEO Yoon Jong-won / Korea Times file
Industrial Bank of Korea CEO Yoon Jong-won / Korea Times file

By Lee Kyung-min

Industrial Bank of Korea (IBK) may end up having at least one outside director recommended by its labor union, an easier task since the state-run lender has greater discretion in the appointment of such figures unlike their commercial counterparts that need approval from shareholders.

The labor-backed outside director will be able to serve in the same capacity as executive directors, deeply involved in overall corporate management including budget planning, revisions of rules and discretion over asset transactions.

KB Financial Group's union recommended two figures with expertise in environmental, social and corporate governance (ESG) to be appointed as outside directors. But the attempt, which was the union's third, was voted down at the group's shareholders' meeting, Nov. 20, 2020.

This was because the recommendation failed to meet the requirement of a majority support following the attendance of holders of over a quarter of the number of the firm's voting shares.

The move by IBK's union is in line with attempts by unionized workers at other state-run and private financial firms to recommend outside directors to company boards, which is a stepping stone to the appointment of a "labor-friendly director" to ensure union participation in corporate management. That was also a campaign pledge made by President Moon Jae-in, but lost steam amid fast-souring public sentiment following the failure of several of the administration's policies, including its inability to tame soaring residential property prices.

The IBK union said it submitted a list of candidates to CEO Yoon Jong-won, saying the number and the identities of the recommended officials will remain undisclosed.

A group of candidates shortlisted by Yoon will be submitted to the Financial Services Commission (FSC) for confirmation before April.

The union said candidates it recommended have higher chances of confirmation, since the appointment requires a recommendation from only the IBK head and a subsequent go-ahead from the FSC chairman. Approval from the financial watchdog's chairman is considered almost a given.

The claim is based on the current law that does not bar unions from recommending certain candidates for the powerful positions, a reason why the union views would help facilitate the appointment of left-leaning figures with priorities on labor rights over effective corporate management.

Whether Yoon would choose a union-recommended candidate will determine the outcome of the politicized issue that has dragged on for a year.

Yoon said in a Feb. 18 press conference that the recommendation must be preceded by the revision of related laws, raising the possibility that he would not move forward with the union's request.

"We plan to recommend experts with excellent capabilities to the FSC. Candidates put forth by the union will not automatically make the list, with the key variable being their expertise and capabilities," he said.

This is a notable change in stance from about a year ago when he promised to let the union recommend a director in return for halting a strike organized to oppose Cheong Wa Dae appointing the President's former advisor for economic affairs as the lender's head.

"I think it will definitely help if one of our outside directors represents the interests of not only shareholders but also employees," Yoon said shortly after his inauguration, Jan. 28, 2020.



Lee Kyung-min lkm@koreatimes.co.kr


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