South Korean regulators to review adviser posts for retired financial holding executives
In short
A lawmaker's data showed 38 executives who left South Korean financial holding companies since January 2023 were re-hired as advisers, with annual pay bases totalling 5.695 billion won. At a National Assembly audit on 22 October, the Financial Services Commission chairman and the Financial Supervisory Service governor said they would look at covering the practice in the governance improvement plan.
Read the full story 2 min read
Financial Services Commission chairman Lee Eok-won (이억원) said on 22 October that the commission would look at improving the system of advisers at financial holding companies. Speaking at the National Assembly Political Affairs Committee's audit of the financial sector, he said the commission continues to watch governance issues concerning chief executives and officers and would examine improvement measures for how the adviser system is run. Financial Supervisory Service governor Lee Chan-jin (이찬진) said talks at working level aim to include 'shadow' adviser posts in the governance plan, adding that it could be reflected at the last stage. [ 2 , 3 , 4 ]
The remarks followed questions from Democratic Party lawmaker Kim Yong-man (김용만). According to data he obtained through the Financial Supervisory Service from eight financial holding companies, 38 executives who left from January 2023 to September were later appointed to adviser or similar posts within their groups. The annual pay bases set for them total 5.6952 billion won. Newsis said this figure sums each person's annual pay basis and differs from the total actually paid. [ 1 , 2 , 4 , 5 ]
By group, KB Financial had 10, BNK Financial 9, Shinhan Financial 7, JB Financial 5, Woori Financial 4 and iM Financial 3. Hana Financial and NH Financial said they had no such cases. All 10 KB executives who left since January 2023 became management advisers, with annual pay bases of 1.899 billion won in total, set at 50% to 80% of base pay at retirement. Former KB chairman Yoon Jong-kyu (윤종규) received 400 million won a year, 80% of his base pay. [ 1 , 5 ]
Newsis also reported that Kim Tae-oh (김태오), a former iM Financial chairman, became an iM Financial adviser after leaving in 2024 and received about 380 million won a year. Son Tae-seung (손태승), a former Woori Financial chairman, worked as an adviser at Woori Bank and received about 150 million won over roughly five months. [ 1 ]
Five retired BNK Financial outside directors were appointed advisers at BNK Capital and BNK Investment & Securities, each paid 36 million won a year, with the affiliates' chief executives signing off. Woori Financial appointed two retired executives as special research fellows at its research institute, which the institute's internal rules classify as executive officers; one works full time for 240 million won a year. Woori Financial said these are executive officer posts under internal rules, not adviser posts offered as courtesy after retirement. [ 1 , 5 ]
Kim said such adviser posts are not executive posts under the financial company governance law, so pay and other details may not be disclosed. Newsis reported that critics say it is hard for outsiders to see who is appointed and how much they are paid. Chosun Ilbo added that Kim said many of the posts also fall outside the accountability structure chart. Kim said limiting chairs' re-appointment is not enough and that the practice should be addressed when the governance plan is reviewed. [ 1 , 2 , 4 ]
Why it matters
Officials said the issue may be added to the governance improvement plan, though the Financial Supervisory Service governor said inclusion could come only at the last stage. Outlets reported criticism that adviser posts are not covered by executive disclosure rules, which makes pay hard to check from outside.
Key facts
- Data from 8 financial holding companies, obtained by Democratic Party lawmaker Kim Yong-man (김용만) through the Financial Supervisory Service, show 38 executives who left from January 2023 to September were appointed to adviser or similar posts in their groups. [ 1 , 2 , 4 ]
- The annual pay bases set for the 38 total 5.6952 billion won; Newsis said this is a sum of each person's annual pay basis and differs from the total actually paid. [ 1 , 2 , 5 ]
- By group: KB Financial 10, BNK Financial 9, Shinhan Financial 7, JB Financial 5, Woori Financial 4, iM Financial 3; Hana Financial and NH Financial said they had no such cases. [ 1 , 5 ]
- Former KB Financial chairman Yoon Jong-kyu (윤종규) received 400 million won a year as a management adviser, 80% of his base pay at retirement. [ 1 , 2 , 4 , 5 ]
- Financial Services Commission chairman Lee Eok-won (이억원) said at the 22 October audit that the commission would look at improvements to how the adviser system is run. [ 2 , 3 , 4 , 5 ]
- Financial Supervisory Service governor Lee Chan-jin (이찬진) said working-level talks are under way to include the matter in the governance plan and that it might be reflected at the last stage. [ 2 , 3 , 4 ]
Confirmed by several sources
- 38 executives who left financial holding companies between January 2023 and September were appointed to advisory or similar posts in their groups, with annual pay bases totalling 5.6952 billion won. [ 1 , 2 , 5 ]
- All 10 KB Financial holding executives who left since 2023 became management advisers, and former chairman Yoon Jong-kyu was paid 400 million won a year. [ 1 , 2 , 5 ]
- The Financial Services Commission chairman said at the 22 October audit that improvements to the adviser system would be examined as part of governance reform. [ 2 , 3 , 4 , 5 ]
- The Financial Supervisory Service governor said talks are under way to include adviser posts in the governance plan, possibly at the last stage. [ 2 , 3 , 4 ]
- Kim Yong-man said such posts are not executive posts under the financial company governance law, so pay and other details may not be disclosed. [ 1 , 2 , 3 , 4 ]
Still unclear
- Whether the adviser practice will actually be written into the governance improvement plan. The Financial Supervisory Service governor said only that it might be reflected at the last stage; the Financial Services Commission chairman said it would be looked at.
- Whether Woori Financial's special research fellow posts are retirement-courtesy adviser posts. Woori Financial said they are executive officer posts under the institute's internal rules, not adviser posts, while Newsis reported criticism that a post was created for retired executives.
- How much was actually paid to the 38 people. Newsis said the 5.6952 billion won figure is a sum of annual pay bases and differs from actual payments.
- Whether the 38 were all executives or included outside directors. Bloter described them as executives and outside directors; Newsis and Chosun Ilbo called them retired executives, and Newsis said five BNK outside directors were among the cases.
What local media are saying
Timeline, local time
- Newsis reports the data on 38 retired holding company executives re-hired as advisers (21 October). [ 1 ]
- Newsis reports that authorities will consider reflecting the practice in the governance improvement plan (22 October). [ 2 ]
- Asia Economy reports the Financial Services Commission chairman's pledge to pursue improvement, made at the 22 October audit. [ 3 ]
- Chosun Ilbo reports the officials' remarks at the audit. [ 4 ]
- Bloter publishes its report on the 'shadow executive' controversy. [ 5 ]