Financial Services Commission Vice Chairman Kwon Dae-young said on the 16th that the government will prepare measures to strengthen shareholder control over the reappointment of financial holding company chief executive officers (CEOs).
Kwon chaired the first meeting of the task force (TF) on governance advancement at Government Complex Seoul on the morning of the same day and stated accordingly, saying, "We will resolve the issues raised in the management succession process, including CEO selection."
The TF was launched to devise measures to enhance transparency and fairness in financial sector governance. It is being formed about a month after President Lee Jae-myung called the practice of extending the terms of financial holding company chairmen a "corrupt inner circle" during the Financial Services Commission's work briefing on the 19th of last month. Executives in charge at the financial authorities and figures from academia and the legal community joined the TF.
The TF decided to prepare governance advancement measures including: ▲ enhancing the independence and diversity of financial company boards ▲ improving management succession systems such as CEO selection ▲ rationalizing performance-based compensation systems ▲ rectifying unreasonable governance practices.
The TF will draw up governance improvement measures by March. Institutional improvements requiring legal amendments will also be reflected in the Act on Corporate Governance of Financial Companies.
Kwon said, "We will push measures to raise the independence and diversity of boards, including the selection of outside directors, so that boards can perform their unique roles and responsibilities independently from management," adding, "We will devise ways to make a transparent, open and competitive succession program function in a manner that anyone can accept."
In addition, the compensation system will be designed to be linked to long-term value, and the practice of paying excessive bonuses will be improved through shareholder oversight. Measures will also be prepared to claw back overpaid performance compensation.