Proxy advisory firm Institutional Shareholder Services (ISS) opposed KB Financial Holdings’ appointment of outside directors for the failure of the acquisition of ING Life Insurance and their close connection to the government. Under the circumstances, the appointment is unlikely to be made at the general meeting of shareholders scheduled for March 22 because foreign institutional investors tend to follow ISS’s opinions.
The organization published an examination report on the issue on March 12, saying that it is opposed to the appointment of the three recommended nominees -- Lee Kyung-jae, Bae Jae-wook and Kim Young-gwa.
“The five outside directors led by Lee Kyung-jae were opposed to the takeover of ING Life at the final vote even the board of directors had given a green light at an amount of between 2.42 trillion and 2.9 trillion won,” the report read, continuing, “The failed attempt to acquire ING Life has resulted in severe leadership problems.”
It went on, “Furthermore, Lee Kyung-jae, Bae Jae-wook and Kim Young-gwa are very closely connected to the government and the shareholders should stand against them to strengthen the political independence of the company. In Korea, there is a deep-rooted tradition of hiring former bureaucrats but it is doubtful whether it serves the interest of shareholders.”
Foreign institutional investors are planning to give their final opinion before the end of this week after going over the report. “We respect the opinion of ISS and will consider it carefully,” said Lee Chan-woo, who is heading the Fund Management Center of the National Pension Service (NPS). As of the end of last year, the NPS is the largest shareholder in KB Financial Holdings with an 8.2% stake. Major stockholders in KB include Citibank (8.7%) and funds associated with Franklin Resources and the foreign shareholding rate is over 60%. ING Bank had owned 5% of the shares until the end of 2012 but recently disposed of them after the sale of ING Life failed.
ISS is a subsidiary of Morgan Stanley Capital International (MSCI). It analyzes issues related to general stockholders’ meetings and provides its opinions to more than 1,700 institutional investors the world over.