Financial firms brace for shareholders' meeting

From left are Hana Financial Group Chairman Kim Jung-tai, Hana Bank CEO-nominee Park Sung-ho and Woori Bank CEO Kwon Kwang-seok. The three top executives will start or extend their leadership after receiving approvals from shareholders' meetings slated for next week. Courtesy of each firm

By Lee Min-hyung

Korea's major financial holding firms are bracing for shareholders' meetings next week amid concerns that their largest shareholder ― the National Pension Service (NPS) ― may exercise voting rights against key management objectives.

Some outstanding issues include the extension of leadership, the appointment of nonexecutive directors and a series of post-coronavirus issues ― such as their decisions to reduce dividend payouts.

Most critical items are widely expected to pass during the upcoming meeting despite NPS opposition. But financial firms are in a touchy situation amid rising discontent from shareholders due to a recent decision by banks to reduce their dividend offerings in line with calls from authorities.

Starting with Shinhan Financial Group's planned meeting slated for March 25, other major financial firms ― such as KB, Woori and Hana ― will bring up issues to address discontent from shareholders over the dividend cut.

Shinhan plans to change part of its articles of association during the upcoming meeting, allowing the firm to provide dividends on a quarterly basis from the current year-end dividend policy.

This will enable Shinhan shareholders to receive dividends each quarter starting as early as the second half of 2021.

“This is part of our efforts to boost shareholder returns, even if specifics have not been confirmed as to when we will be able to start offering the quarterly dividends, as financial firms are asked to refrain from offering excessive dividends until the end of June,” a Shinhan official said.

KB Financial Group, which will hold its shareholders' meeting on March 26, seeks to reappoint six of seven nonexecutive directors. The decision came amid widening financial uncertainties here and abroad in the aftermath of the global pandemic shock. KB is placing stability ahead of changes by maintaining its top management.

A top priority for Hana Financial Group is to confirm Chairman Kim Jung-tai's extension of term for another year. Last month, the group decided to recommend Kim to serve a fourth term as its leader, and the final decision will be made during the upcoming shareholders' meeting.

But it remains to be seen whether the NPS, the largest shareholder of Hana with more than a 9 percent stake in the group, will vote against Kim's leadership extension. The NPS is increasing its influence on major financial holding firms here by casting negative votes on their major agenda items ― particularly on CEO appointments and dividend policies.

A group of civic groups here insist that the NPS should exercise its strong voting rights to block Kim's leadership extension.

Hana Financial Group will also discuss whether to allow Hana Bank CEO-nominee Park Sung-ho to become a non-executive board member during the shareholders' meeting.

Despite a possible negative vote from the NPS, chances remain slim that Kim and Park will fail to take on the posts, as foreign and institutional investors hold more than 50 percent of the group's shares, while the pension fund obtains less than a 10 percent stake.

Woori Financial Group will also push for a strengthened shareholders' return policy, as part of a key agenda for next week's general meeting of stockholders.

Under the plan, Woori will rebuild its internal capital structure to initiate a more stable and enhanced dividend payment policy right after the coronavirus-induced financial uncertainty comes to an end.

“The decision displays our willingness to push for a swift shareholder return policy after the COVID-19 shock subsides,” an official from Woori said.

The decision reflects the so-called 20 percent dividend rule by the Financial Supervisory Service. Financial holding firms were pressed to set the upper limit of their dividend payout ratios at 20 percent under the regulator's recommendation. Woori along with KB and Hana abided by the rule and cut their 2020 dividends.

Woori will also confirm the extension of Woori Bank CEO Kwon Kwang-seok's leadership during the upcoming shareholders' meeting. Kwon took office as the leader of the bank in March 2020, and under a recent decision by Woori's CEO recommendation committee, he was named as the sole candidate who will lead the bank for another year until the end of March 2022.