NPS to review KB Financial chairman’s appointment

[Courtesy of KB Financial Group]

The Special Committee on Responsible Investment & Governance (SCRIG), a group of external advisors and experts under the National Pension Service (NPS), is set to re-examine the recently proposed appointment of the chairman for KB Financial Group. This committee is a specialized organization responsible for exercising shareholder rights on the pension fund’s behalf by providing expert opinions on sensitive issues. SCRIG was established in 2018 when NPS introduced a stewardship code.

The committee is expected to discuss how to exercise its voting rights regarding the appointment of KB Financial’s next chairman later in the month, according to industry sources on Thursday. In most cases, the pension’s investment committee is in charge of determining whether to exercise voting rights. But recent developments suggest that the pension fund considers the chairman appointment at KB Financial Group a sensitive issue, as discussions on voting rights in SCRIG occur either when the investment committee directly requests to address an issue or when the body seeks SCRIG’s guidance after failing to reach a consensus.

The committee’s voting results can also influence foreign and retail shareholders. As of the end of June, NPS held an 8.22 percent stake in KB Financial, while foreign shareholders, including JPMorgan Chase & Co. and BlackRock, Inc., accounted for a staggering 72.8 percent, and foreign investors often pay attention to how pension funds exercise their voting rights. KB Financial’s shareholder meeting is scheduled for November 17.

KB Financial selected Vice Chairman Yang Jong-hee as its next chairman following a management succession process that began in July 2023. During a national audit last month, Financial Supervisory Service governor Lee Bok-hyun expressed some disappointment with the appointment process, pointing out that KB Financial had to lay out the evaluation criteria and appointment method for the process before candidates applied for the position.