South Korea's Financial Services Commission (FSC) published an explanation defending the effectiveness of chief executive officer (CEO) reappointment safeguards in its governance reform plan announced November 12. The clarification addresses criticism that historically high shareholder approval rates would blunt tougher voting requirements. Of 14 chair appointment and reappointment votes at the four largest bank holding companies during 2017-2026, three received less than two thirds support. Two were reappointments that would have failed the plan's requirement for at least two thirds approval.
The plan would also impose a separate check before the shareholder vote by requiring reappointment recommendations to receive approval from at least three quarters of the nomination committee's total membership, rather than members attending. On a committee of seven, two opposing members would therefore block a recommendation. CEO nomination committees would consist entirely of independent directors, while incumbent CEOs would be prohibited from involvement in independent director appointments. Shareholder nominations and stronger director assessments and disclosures would support these independence safeguards. Accountability measures would require confirmations from every nomination committee member accompanying shareholder meeting materials, direct explanations of recommendations by committee chairs and inclusion of those chairs in the responsibilities mapping framework.