JB investors urged to oppose Align's call for board overhaul

Global proxy advisors International Shareholder Services Inc. (ISS) and Glass Lewis & Co. have expressed their opinion that there is no need for South Korea’s JB Financial Group to accept Align Partners Capital Management Inc.’s demand for a substantial overhaul of the group’s board, banking sources said on Sunday.

The advisors’ recommendations are expected to influence stakeholders who will vote on JB Financial’s board of directors at the general shareholders meeting on March 28. Foreign investors hold a 35.68% stake in the local financial services provider.

Align Partners, a Seoul-based fund with a 14.04% stake in JB Financial, is demanding the company appoint five new outside directors -- that it has recommended -- and increase the number of non-executive directors from the current one to two to enhance JB Financial’s governance.

In a March 17 report, ISS said the dissident (Align Partners) called out JB Financial’s governance issues but came short of providing concrete evidence to substantiate malignant intentions. A change is not warranted at this time, ISS noted.

While the group’s growth has moderated in the past two years, it has a clear strategy and the incumbent directors have a proven track record, ISS added.

Glass Lewis said on March 17 that it believes Align Partners may be taking somewhat of a misguided approach in focusing the local fund's efforts on targeting JB Financial, which undoubtedly has been the best-performing bank among the publicly traded Korean banks.

JB Financial has insisted it will appoint only one of the five outside director candidates that Align Partners has recommended and fill the remaining seats with ones that JB Financial’s board recommends.

Write to Euijin Jeong at justjin@hankyung.com

Jihyun Kim edited this article.