KB Financial Group Inc. (105560) shareholders approved the appointment of three external board members, disregarding a U.S. proxy advisory firm’s concern that their government relationships may threaten board independence.
Kim Young Kwa won approval as a new outside director at the Seoul-based company’s annual general meeting today, while tenures for existing board members Lee Kyung Jae and Bae Jae Wook were extended.
Institutional Shareholders Services Inc. advised shareholders to reject the three nominees earlier this month, calling the practice of appointing former officials to the board and potential government influence over KB’s leadership a concern. The board thwarted Chairman Euh Yoon Dae’s bid to buy ING Groep NV’s South Korean life insurance unit in December.
“While the appointments of non-executive directors were passed with more than 65 percent approval, we still humbly accept the opinions of opposing shareholders,” Euh told shareholders today, pledging to improve external communications.
Kim has formerly held positions at the country’s finance ministry, according to ISS. Lee has worked for the Bank of Korea, and Bae was presidential secretary from 1992 to 1998, according to the website of KB, the owner of South Korea’s biggest bank.
“Political changes appear to be placing unnecessary risks at the company and making its strategic direction uncertain, possibly due to some of the directors’ close relationship with the government,” the ISS said in a note to shareholders on March 15.
KB’s board refuted the ISS’s report, calling it “distorted and exaggerated” in an e-mailed statement on March 14.
Non-executive directors Kim Young Jin, Lee Jong Cheon, Koh Seung Hee, Lee Young Nam and Cho Jae Mok also received approval for a one-year extension of their terms, today’s vote showed.
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