Vague eligibility criteria, lax candidate pool management flagged as problems

Financial Supervisory Service Director General Lee Chan-jin. [Yonhap]
Financial Supervisory Service Director General Lee Chan-jin. [Yonhap]

Financial Supervisory Service Director General Lee Chan-jin said the CEO succession process at financial holding subsidiaries must be made more transparent and fair, ahead of a round of executive appointments expected by year's end.

Speaking at an executive meeting Tuesday, Lee said succession procedures are underway for a large number of financial holding subsidiary CEOs, including bank presidents, but that the processes put in place by subsidiary CEO candidate recommendation committees at many holding companies fall short. He added that the role of subsidiary executive candidate recommendation committees is also limited in some cases.

Lee cited specific shortcomings, including overly vague CEO eligibility criteria and the absence of a minimum vetting period when narrowing down candidates. He said standing candidate pools are managed in a perfunctory manner and that the process of shortlisting and evaluating candidates lacks sufficient transparency.

On the role of subsidiary executive candidate recommendation committees, Lee said only some holding companies follow corporate governance best practices — such as sharing the status of standing candidate pools for subsidiary CEOs or granting recommendation authority to bank-level committees.

"There is a need to further strengthen transparency and fairness across the entire CEO succession process — from candidate pool selection and evaluation to the management of related records," Lee said.

The FSS's corporate governance advancement TF, which has been operating since January, has also discussed measures to prevent CEO appointments from being made in a closed manner based on factional ties or personal relationships.

Lee urged financial companies to operate transparent and fair succession procedures in ways that contribute to enhancing shareholder value. The FSS plans to step up monitoring of whether CEO succession processes are conducted according to transparent and fair standards.

Meanwhile, financial sector governance reform proposals pursued by financial authorities have made little headway in the National Assembly. The proposals were referred to the legislation subcommittee of the Assembly's Political Affairs Committee last month but have not been placed on the subcommittee's agenda, with disagreements persisting over issues such as how to limit financial holding company chairmen to three consecutive terms.


rim@heraldcorp.com