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Dispute reignites over union-recommended director system

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From left are KB Kookmin Bank CEO Lee Jae-keun and Industrial Bank of Korea CEO Yoon Jong-won. Yonhap
From left are KB Kookmin Bank CEO Lee Jae-keun and Industrial Bank of Korea CEO Yoon Jong-won. Yonhap

By Lee Min-hyung

A dispute over a labor union-backed outside director system is expected to flare up again ahead of regular shareholders' meetings at financial institutions scheduled for early next year amid growing calls for them to diversify the structure of their boards of directors.

The introduction of the system was a key item on former President Moon Jae-in's agenda, as part of his administration's efforts to enhance the influence of labor unions in management affairs. Earlier, the Export-Import Bank of Korea (Eximbank) appointed Maritime Finance Research Institute CEO Lee Jae-min as a union-recommended director.

Labor unions from other financial firms ― such as KB Financial Group and the Industrial Bank of Korea (IBK) ― have also remained aggressive in their push to invite outside directors with little connection to management. But the efforts ended up hitting a snag due to such factors as shareholder opposition.

But with financial authorities intensifying pressure on financial firms to remain fair and transparent in forming their boards, multiple financial firms are expected to resume their efforts to follow Eximbank's example.

Last month, Financial Supervisory Service Governor Lee Bok-hyun urged the chairmen of boards of directors representing the nation's major financial holding firms to make more efforts in appointing directors through transparent and quantifiable procedures.

KB Kookmin Bank's labor union is looking for candidates for union-backed outside directors who will be recommended during the lender's upcoming regular shareholders' meeting slated for March 2023. Earlier this year, the union recommended former Eximbank Vice President Kim Young-soo as its new outside director, but the proposal was rejected during the shareholders' meeting.

The shortlist for the position has yet to be confirmed, but KB's union is going all-out to allow a member from its side to engage in the management of the company this time after its five previous attempts ended in failure.

The IBK union is also expected to bring up the issue again, but given that incumbent IBK CEO Yoon Jong-won expressed his intention to step down in January, it appears more time will be needed for the state-run lender's union to fine-tune details on the agenda with top management.

Lee Min-hyung

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