A global proxy advisory firm has objected to proposals from the union of South Korea’s leading financial group, putting a brake on the growing labor movement in the country’s banking sector to wield influence in management.
According to the financial industry on Thursday, U.S.-based Institutional Shareholder Services (ISS) advised institutional investors to vote against the two proposals forwarded by the labor union of KB Financial Group Inc. at the upcoming shareholders meeting on Nov. 20.
ISS in its latest report argued against the union’s attempt to nominate a lawyer with background in civil activism as an outside director. It also objected to proposed revisions in the articles of incorporation aiming to limit the role of the chief executive.
The advisory firm said it was unclear how the lawyer’s past experience could contribute to the board and noted that there was already a legal expert on the board.
The company also dismissed the proposal to prevent KB Financial’s CEO from attending board meetings, saying that undermining the CEO’s power does not increase shareholder value.
Labor voice in Korea has gotten louder under pro-labor President Moon Jae-in.
ISS is the world’s leading provider of corporate governance solutions. Its reports on shareholder meeting agenda are widely referred to by institutional investors.
Foreigners own about 68 percent of KB Financial’s shares while the group’s union only holds a 0.18 percent share. Despite the small stake, the labor union was able to make a proposal to the board because of revisions in the financial corporate governance code last year, which now allow shareholders with even a 0.1 percent stake to voice their opinion.
Shares of KB Financial closed Friday down 0.52 percent at 57,400 won ($51.36)
By Roh Seung Hwan and Kim Hyo-jin
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]