The financial authorities' announcement of a corporate governance reform plan to eradicate the "corrupt inner circle" in the financial sector, flagged by President Lee Jae-myung, is reportedly unlikely again this month. The authorities are now in the final stage, bolstering measures to secure the independence of the Nominating Committee and wrapping up the reform plan.
According to the financial authorities on the 26th, the timing for the Financial Services Commission and the Financial Supervisory Service to announce the final corporate governance reform plan remains undecided. Since last month, the Middle East crisis has prolonged an economic emergency of high oil prices and a strong dollar, pushing the issue down the authorities' policy priorities. This month, Financial Services Commission Chair Lee Eog-weon's schedule accompanying the president's trips to India and Vietnam also overlapped.
The financial authorities are discussing the reform plan with key tasks including the selection process for financial holding company chief executive officers (CEOs), enhancing board independence, and improving performance-based compensation.
As it stands, momentum is behind raising the bar by requiring a special resolution at the shareholders meeting for CEO reappointment, and, rather than directly limiting outside directors' terms, ensuring verification and evaluation of board independence through stronger requirements for drafting and disclosing minutes. It is also understood that, in the final stage, a plan was discussed to secure independence by strengthening the Nominating Committee's vetting and recommending functions so it does not put forward outside director candidates who may have conflicts of interest with management.
Earlier, when President Lee in December last year called the practice of reappointing financial holding group chairmen a "corrupt inner circle" during a Financial Services Commission briefing, the Financial Services Commission and the Financial Supervisory Service launched a task force (TF) in January to improve financial holding company governance and set a plan to release reforms by March this year. A briefing schedule was in fact set for mid-last month, but it was abruptly canceled on the day of notice, prompting talk of differences between the Financial Services Commission and the Financial Supervisory Service.