Regulators move to ban third terms for financial holding company chiefs - 매일경제 영문뉴스 펄스(Pulse)

South Korea's financial regulators are expected to unveil governance reform measures this week that would prohibit a third consecutive term for the chief executives of financial holding companies, marking a significant shift in succession planning across the banking sector. According to industry sources on Monday, the Financial Services Commission is expected to announce the governance reform package this week. A financial authority official said regulators are considering convening the chairmen of the country's eight major financial holding companies on Tuesday, when Financial Services Commission Chairman Lee Eok-won could present the proposal. The final schedule and format are expected to be confirmed shortly.

The reforms were drafted after President Lee Jae Myung criticized the governance structure of financial groups in December, saying that entrenched inner circles had continued to maintain control. The proposed package is expected to include revisions to the Financial Companies Governance Act that would legally ban a third consecutive term for the chairman of a financial holding company. The proposal follows President Lee's earlier criticism that executives had rotated between chairman and bank chief executive positions, allowing them to remain in power for decades. Regulators had initially considered requiring a special shareholder resolution for a third term, which would have required approval by at least two-thirds of voting shareholders present at a meeting representing at least one-third of outstanding shares.

However, after consultations with the presidential office, authorities are now leaning toward an outright ban on a third consecutive term. A special resolution requirement is still expected to apply to a second consecutive term, raising the threshold for reappointment. The reform package is also expected to introduce a clawback system allowing companies to reclaim executive performance bonuses that have already been paid, along with a "say on pay" system requiring shareholder approval of executive compensation plans.