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The Extended Corporate Governance Committee (the “Extended Committee”) of KB Financial Group Inc. (“KBFG” Chairman & CEO: Jong Kyoo Yoon) held its first meeting in the morning of September 1, 2017. The Extended Committee appointed Mr. Young-Hwi Choi, a non-executive director, as its chairperson and officially commenced the CEO succession process to nominate a CEO candidate.

The Extended Committee is composed of all seven non-executive directors of KBFG’s Board of Directors, in accordance with relevant internal regulations. At its first meeting, the Extended Committee received a report regarding a list of 23 CEO candidates (the “Long List”), consisting of 18 internal candidates (including the incumbent CEO, Dr. Jong Kyoo Yoon) as well as five external candidates, and established detailed operating procedures of the Extended Committee. The activities of the Extended Committee will continue for a month through the end of September. The next meeting is scheduled to be held on Friday, September 8, where the members of the Extended Committee are expected to start evaluating and narrowing down the candidate pool.

The Corporate Governance Committee, which will play a central role in the CEO succession program of KBFG launched on September 1, operates on a dual track, comprising a standing committee (the “Standing Committee”) and the Extended Committee. The Standing Committee is responsible for the design and revision of succession plans for KBFG’s group CEO and the CEOs of its subsidiaries, while the Extended Committee is responsible for the selection of the group CEO nominee. The Standing Committee, which consists of three non-executive directors, the current Chairman & CEO and a non-standing director, is chaired by different directors depending on the function: Mr. Young-Hwi Choi, a non-executive director, acts as the chairperson for matters relating to the group CEO, while Dr. Jong Kyoo Yoon, the current CEO, acts as the chairperson for matters relating to the CEOs of KBFG’s subsidiaries. (Please refer to Table 1 below for further details.)

One of the major functions of the Standing Committee with regard to the nomination of the group CEO is to continuously maintain the Long List. In July of last year, KBFG adopted “CEO Succession Regulations” which cover, among other things, the qualifications of CEO candidates, continued maintenance of the candidate pool and the CEO candidate nomination process. In accordance with these regulations, the Standing Committee will manage two separate candidate pools that comprise the Long List: the “internal candidate pool” consisting of the group’s key executive officers, and the “external candidate pool” consisting of those recommended by external professional firms. The Standing Committee is required to report these candidate pools to the meetings of the Board of Directors every six months, for the stable operation of the CEO succession program. However, to avoid any conflicts of interest, the CEO Dr. Jong Kyoo Yoon and non-standing director Mr. Hong Lee are excluded from the process of developing the Long List, with only three non-executive directors participating in such process.

The standing corporate governance committee of KBFG, chaired by Mr. Young-Hwi Choi, determined the Long List in two stages – once in the second half of 2016 and subsequently in the first half of 2017. In particular, in the first half of 2017, every existing candidate as well as new candidates recommended by external professional firms were re-evaluated to keep the list up-to-date and fair. In accordance with relevant internal regulations, the Extended Committee will select the final CEO candidate out of the pool of 23 candidates who were confirmed in the first half of 2017.

In its future meetings, the Extended Committee will narrow down the Long List to a short list of three candidates and will conduct a thorough and in-depth review of the shortlisted candidates. The Extended Committee will then conduct a vote based on the results of such review, and the candidate who receives two-thirds or more of the votes will be selected as the final candidate. Thereafter, if there are no disqualifying factors based on a review the final candidate’s qualifications for appointment as a director pursuant to applicable laws and regulations, such candidate will be recommended as the CEO nominee to the Board of Directors of KBFG.

In this regard, Dr. Jong Kyoo Yoon will be evaluated as one of the 23 candidates based on the same criteria applied to the others, without any priority as the incumbent CEO. Indeed, the Extended Committee indicated that it will apply stricter as well as fair standards in evaluating the candidacy of Dr. Yoon, who has managed KBFG for the past three years as the incumbent CEO.

In addition, the Extended Committee established the basic principles for the nomination of the CEO as part of its detailed operating procedures. These basic principles reflect four tasks to be assigned to the new CEO based on KBFG’s accumulated experience, business performance, stage of growth, organizational characteristics and changes in the business environment. The four tasks are as follows: “enhancing corporate social responsibility and ethical business management,” “establishing a stable corporate governance structure for sustainable growth,” “developing a harmonious and dynamic KBFG corporate culture” and “building a foundation for future growth.” The Extended Committee is expected to nominate a candidate who is most capable of performing the above tasks.

Table 1. Corporate Governance Committee of KBFG