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SEOUL, March 22 (Yonhap) -- Shareholders of KB Financial Group Inc. approved on Friday the motion to appoint controversial outside directors who are seen as having ties with the government, raising questions about the board's independence.
Shareholders of South Korea's No. 2 banking group held a meeting earlier in the day to review the plan and approved the appointment of outside directors, including three figures by 66.5 percent in favor, officials said.
The terms of current board members Lee Kyung-jae and Bae Jae-wook were extended by one year while Kim Young-kwa was appointed as the new outside director.
The decision came as the group has been embroiled in internal strife following the dismissal of an executive on suspicions of leaking false information to deter the reappointment of the outside directors.
KB Financial Group decided on Monday to sack chief strategy officer Park Dong-chang on suspicions that he leaked groundless information to the Institutional Shareholder Services Inc. (ISS), a U.S. proxy advisory firm, and some large shareholders.
Park reportedly called for those shareholders to reject the reappointments, saying that they contributed to seriously hurting the group's shareholder value by rejecting the group's move to take over ING Life Korea.
The group had been seeking to buy the life insurer in a bid to diversify its business portfolio. But the board turned down the group's takeover bid in December, saying that maintaining financial soundness is more important amid economic uncertainty.
The ISS said in its report that independence of the group's board is questionable as several outside directors have ties with the government, wielding influences on the board's operations. The agency advised foreign institutional investors to oppose the reappointment of several outside directors.
The group's management tried to patch up a spate of internal strife by explaining opposing shareholders circumstances surrounding the report.
But industry analysts said that the recent row will inevitably leave scars on KB Financial Group, whose governance structures and the board's independence will be put to test.
The internal feud may deal a blow to Group Chairman Euh Yoon-dae as well, whose three-year term will end in July, at a time where the new government is mulling changing heads of state-run institutions.
KB Financial Group is not a state-invested banking group, but speculation is rampant that Euh, a close aide to former President Lee Myung-bak, may be pressured to step down, in line with the government's moves to switch leadership of public institutions.
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