Board approves revised CEO succession plan

Succession process for group chairman to begin two months earlier

Candidates to receive fuller information to ensure level playing field

A view of BNK Financial Group headquarters [BNK Financial Group]
A view of BNK Financial Group headquarters [BNK Financial Group]

BNK Financial Group announced Thursday it will significantly overhaul its CEO succession process, sharply strengthening fairness and transparency in the appointment of its group chairman and subsidiary heads.

The executive candidate recommendation committee of BNK Financial Group held a meeting in Seoul on Wednesday afternoon and approved the "CEO Management Succession Plan Adequacy Review and Revision," which introduces sweeping improvements to the succession procedures for the financial holding company and its nine subsidiaries.

The revised plan, submitted to and approved by the board of directors following consultations with an external advisory firm, centers on reinforcing transparency and fairness in the appointment process for both the group chairman and subsidiary CEOs.

Under the revisions, the start of the group chairman succession process will be moved up from three months before the end of a term to five months before, allowing more time for the evaluation and vetting of candidates. The plan also establishes a fair competitive framework between internal and external candidates by guaranteeing equal access to information — including the group's current status, medium- and long-term strategy, financial position, standard evaluation criteria, presentation topics, assessment items, and appointment schedules and procedures — provided to all candidates in advance.

The revisions also expand the role of the bank's executive candidate recommendation committee, granting it standing authority to recommend a pool of candidates. The committee chair will be allowed to observe final interviews conducted by the holding company's subsidiary CEO candidate recommendation committee and submit opinions on appointments. The mandatory qualifications for CEO candidates will also be relaxed to broaden the pool of internal and external talent, and the duration of each stage in the succession plan will be extended to give candidates adequate preparation time and allow evaluators to conduct more thorough assessments.

The revised subsidiary CEO appointment procedures will take immediate effect for seven subsidiaries — Kyongnam Bank, the investment securities unit, the savings bank, the asset management unit, the venture investment unit, the credit information unit and the systems unit — whose terms expire at the end of this year. The candidate recommendation and appointment process for those seven companies is set to begin this month. The holding company's subsidiary CEO candidate recommendation committee plans to search for external candidates for Kyongnam Bank and the investment securities unit through a professional recruitment agency, while also requesting candidate recommendations from the bank's executive recommendation committee.

A BNK Financial Group board official said expanding the authority of subsidiary CEO appointment committees had long been recommended as best practice by the Financial Supervisory Service, but the financial industry had been reluctant to act on it. "The newly appointed outside directors and the group chairman agreed to proactively strengthen the public accountability and transparency of the subsidiary CEO appointment process," the official added.

Do Han-young, secretary general of the Busan branch of Citizens' Coalition for Economic Justice, said fairness and transparency in financial sector CEO successions had consistently been a source of controversy. "This measure should go a long way toward resolving those concerns," he said, and went on to say the decision was "a highly meaningful step that will significantly boost public trust."

Meanwhile, Financial Supervisory Service Director General Lee Chan-jin had called on major financial holding companies on Tuesday to strengthen transparency and fairness in their subsidiary CEO succession processes. Industry observers say the regulator's move amounts to a check on the longstanding practice in which holding company chairmen and boards have in effect decided subsidiary CEO appointments themselves.


kaf2002@heraldcorp.com