South Korea: Regulator to scrutinise management appointment process
Source: Asia Insurance Review | Jan 2018
South Korea Regulation C-Suite
The Financial Supervisory Service (FSS) will examine the appointment processes at major financial holding companies, amid criticism that some current chairmen were extending their rule to second and third terms by using procedural loopholes.
FSS Governor Choe Heung-sik pointed out that many financial services companies lack objective criteria to choose the right candidate; and also lacked programmes to nurture top management.
“To become a chairman of a financial holding company, one should have experience in sectors other than banking, such as securities and insurance, since the group has many non-banking subsidiaries. However, many potential candidates are not given the chance to build up experience, which makes the incumbent the sole candidate,” he said.
“We found that the candidate recommendation committees are formed in very irrational and unfair ways,” he said.
To select a chairman, financial holding companies usually set up a committee composed of outside directors, which is in charge of recommending the best candidate. Often, there is a sole candidate who is usually approved at a shareholders’ meeting, reported The Korea Times.
“The current management of financial holding companies is exercising too much influence on the committee when it selects candidates,” Mr Choe also said.
For instance, some chairmen join the candidate recommendation committee meetings. Mr Choe pointed out that this was virtually equal to the current chairman recommending himself. A