gettyimagesbank By Lee Kyung-min The country’s top five financial groups — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — are expected to retain most of their outside directors, fanning concerns over “rubber-stamping” of board decisions at the expense of oversight and monitoring, market watchers said Friday. The long-standing practice is unlikely to change any time soon, as evidenced by Financial Supervisory Service data where no opposition votes were recorded during the 168 motions passed over the course of 54 board meetings attended by 38 outside directors at the four financial groups, except NH, last year. Data showed that the working hours of 32 outside directors at the four groups averaged 405 hours last year, meaning they worked an average of 1.64 hours per day and received an annual salary of 80.43 million won ($55,000) on average. Read More Financial groups to reshuffle outside directors for internal reform KB retains top spot among 4 financial groups with record $3.5 bil. net income Financial groups lukewarm about eased holding requirements on fintech stakes Risk-weighted asset exposure of 5 financial groups spikes following martial law fiasco According to the financial industry, the terms of 27 out of the 38 outside directors at the five major financial groups are set to expire soon. Outside directors can extend terms by one year after the first two-year term ends. They can serve up to six years with the exception of KB Financial where it is limited to five years. Seven out of Shinhan's nine outside directors are set to have their terms expire this month. The board held a meeting to recommend two new candidates on Tuesday. This, together with the remaining five new candidates, will raise the proportion of female outside directors at Shinhan to 45 percent, the highest among the financial groups. KB will replace six out of seven outside directors whose terms will end this month. The group’s current female-to-male proportion of 42 percent will be maintained since three of the seven will be filled in by female directors. Hana will replace five out of nine outside directors. The addition of former Standard Chartered Korea Executive Suh Young-sook will raise the female proportion to 33.3 percent, up from 22.2 percent. Woori will fill in four new outside directors. NH Nonghyup will replace four out of six outside directors. An industry official said the outside directors find it difficult to express opinions against the heads of the financial firms. “The outside directors are limited not only by their terms but also the formality of the whole process of it,” he said. “This is nothing new.” Financial groups say criticism about rubber-stamping is overblown since most of the agenda items are deliberated before the meeting. “Outside directors can raise issues before the meeting if they find something inappropriate, but not during,” an industry official said. Meanwhile, the groups are hiring a greater number of legal experts in a collective move to fortify monitoring and prevention of embezzlement, among other employee misconducts at commercial banks. Legal experts account for up to 16 percent, up from the previous single-digit figure. Shinhan and Woori also bolstered digital finance experts to 25 percent.
