Financial Supervisory Service Governor Lee Chan-jin said on the 28th that he would block the structure in which an outside director appointed by the sitting chief executive officer (CEO) can easily decide to extend their term. He said the plan is to strengthen the Nominating Committee's vetting responsibility in the process of appointing outside directors and to expand shareholders' check-and-balance functions.
Lee, speaking as a lecturer at the Korea Institute of Finance's training for new outside directors that day, noted that among more than 6,100 total board votes at domestic banks and holding companies last year, there was only one case in which an outside director cast a dissenting vote. He added, It raises questions about how independently outside directors have been making judgments.
He also cited Financial Supervisory Service (FSS) inspection cases. Financial holding company A eased the age limit for the chair in its articles of incorporation during the Nominating Committee process, creating an environment favorable to the incumbent chair and causing issues. Financial holding company B showed that, during the Nominating Committee process, a majority of outside directors gave the highest scores to the incumbent chair without separate opinions.
Lee said the current structure, in which outside directors appointed by the CEO decide whether to extend their terms, risks undermining board independence and accountability. He added that, when appointing outside directors, he would expand the Nominating Committee's vetting responsibility and duty to explain, and diversify shareholder nomination channels to strengthen the independence and accountability of outside directors.
He also laid out plans to strengthen shareholders' check-and-balance functions. The idea is to prepare board minutes thoroughly and expand disclosures to make it easier for shareholders and regulators to review them. Lee said, We will ensure board minutes are recorded meticulously so that shareholders and financial authorities can scrutinize them closely.