KB to give priority to top execs seeking reappointment

In an effort to secure management stability, KB Financial Group plans to offer priority to the incumbent chair and executives in deciding whether they wish to serve for an additional term.

Despite concerns that this may lead to a monopolistic governance system, the banking group, which had suffered from months of leadership feuds and a turbulent power succession last year, decided that management stability is more important.

KB Financial recently drafted its governance revision plan, aiming to establish transparency in governance and a stable CEO succession system, according to officials on Tuesday.

The key change is that the board of directors, when selecting the new chairperson, should first ask the incumbent chair ― Yoon Jong-kyoo in this case ― whether he will serve another term.

Should the incumbent official wish to do so, the board will then assess his management performance and personnel references. Unless there are disincentives, the current top executive will be recommended as the sole or top-priority candidate.

“Management performance should be the most important factor when deciding whether or not a current chairperson may continue to serve,” said an official of the group.

“Offering a decision priority to those who have excelled during their term is often witnessed in global financial groups in advanced countries.”

A similar priority is to be offered to top executives such as the president and vice presidents of the group’s affiliates. In the case of KB Financial, the list includes the KB Kookmin Bank president, KB Kookmin Card CEO, KB Financial Group’s vice president and the bank’s chief senior directors.

“Outside figures, too, may be named as candidates when they have proven themselves fit for the post, especially when the group’s performance needs improvement,” the official added.

Last year, the group was largely disturbed by the feud between group chairman Lim Young-rok and bank CEO Lee Kun-ho, one being a former government official and the other coming from the banking research institute circles.

But concerns persist about this new top official appointment system as Shinhan Financial Group had adopted a similar system in 2011, only to abolish it after a single appointment.

“The positive side is that KB Financial is trying to exclude outside influence and establish a stable succession process,” said Financial Consumer Agency president Cho Nam-hee.

“But this reappointment system may also lead to factional disputes within the group.”

By Bae Hyun-jung (tellme@heraldcorp.com)