Restart of union-recommended directors in both public and private sectors in the financial sector

Workers in the financial sector begin to appoint union-recommended directors. At a time when the public institution labor director system is about to be implemented in the second half of the year, attention is focused on whether or not it will succeed.

On the 7th, the IBK Industrial Bank of Korea branch of the financial union announced that it plans to recommend two persons, including labor workers, as candidates for outside directors by this week or next week at the latest. It is expected that there will be one labor person and one financial person. An official from the IBK branch explained, “We will strictly appoint the outside director so as not to give an excuse to the government in the process of recommending outside directors.”

Among the board of directors of IBK, the tenure of Mr. Shin and Mrs. Kim as outside directors will expire on March 26th. Independent directors of IBK are appointed by the chairman of the Financial Services Commission after the president of IBK recommends candidates to the Financial Services Commission. Multiple candidates are expected to be recommended to the FSC, including those recommended by the IBK branch and those selected by the bank. Banks also need time to recommend candidates from the bank side, and there is also a period for the FSC to review them.

The union-nominated director system is an agreement between IBK’s labor and management and the government. But last year, the FSC appointed a candidate for the employer rather than the candidate for the union-recommended director, and the promise was broken. For this reason, the IBK branch sees the union-nominated director as “remedies for flaws in fulfilling the promise.” In addition, as the term of office of IBK President Yoon Jong-won, who is a party to the agreement, runs until this year, it is considered as the last chance to become a union-nominated director. As the Export-Import Bank of Korea became the first state-run bank to appoint a union-recommended director last year, IBK is also evaluated to have a high possibility of becoming a reality by reducing the burden of being the ‘first union-recommended director’.

The KB Kookmin Bank branch of the labor union is knocking on the door for workers’ participation in management along with the IBK branch. It is an attempt by private companies to participate in labor management, which is not affected at all by the labor director system of public institutions. The Kookmin Bank branch has been proposing to the general meeting of shareholders a recommendation for outside directors using the minority shareholder rights of the employee stock ownership association for several years. In 2020, he recommended Yoon Soon-jin, a professor at the Graduate School of Environment at Seoul National University, as an ESG (environment, social, governance) expert, who is currently the 2050 carbon neutrality chairperson under the direct control of the president. . A resolution was held at the general shareholders’ meeting in March. The task of persuading the National Pension Service, the largest shareholder, and the task of persuading the foreign shareholders with the largest share of the right to appoint a recommended director are left behind. Although it is somewhat different from the union-recommended director in that the Kookmin Bank branch uses its authority as a shareholder rather than directly recommending it, it is similar in terms of management participation in that it involves transfusion of people from outside to expand the financial publicness. An official from the Kookmin Bank branch said, “As there was a fierce debate within the National Pension Service at the time of the previous ESG expert recommendation, we expect a further decision.”

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