On February 27, 2015, the Board of Directors of KB Financial Group Inc. (“KBFG”) finalized the Corporate Governance Improvement Plan (the “Plan”) of KBFG upon review of the final report on corporate governance of KBFG and recommendations for improvement thereof prepared by the Corporate Governance Improvement Task Force (the “Task Force”).

KBFG launched the Task Force in December 2014 to help fundamentally resolve issues that had surfaced amidst instabilities surrounding its corporate governance and internal controls, and to implement a stable and rational corporate governance operating model suitable for KBFG.  According to a KBFG official, during the three months it was in operation, the Task Force, together with an outside consulting firm, endeavored to thoroughly and comprehensively diagnose KBFG’s corporate governance-related issues and to develop a stable and sound corporate governance model based on case studies of leading global financial institutions.

The Task Force produced a final report containing recommendations for KBFG mainly designed to reestablish the role of its Board of Directors, improve the operation of its non-executive director system and reorganize management of its subsidiaries.  The Board of Directors of KBFG, by resolving to reorganize internal regulations of KBFG to implement the Plan as well as the Financial Corporate Governance Code(the "Code") issued in December 2014, laid the foundations for improving KBFG’s corporate governance.

Specifically, the Plan highlights the decision of the Board of Directors of KBFG to establish the Group Management Committee serving thereunder so as to effectively fulfill its supervisory role of managing the subsidiaries of KBFG.  This decision was in response to an evaluation by the Task Force that a systematic reporting of issues relevant to the supervision and management of KBFG subsidiaries to the Board of Directors of KBFG was lacking and that thorough supervision with respect to certain key issues did not take place.  In addition, in order to strengthen consistency in the supervision of subsidiaries, the Board of Directors of KBFG and the committees serving thereunder will, to the extent permitted by law, gradually take over the functions of the committees serving under the Board of Directors of the wholly-owned subsidiaries of KBFG.  The Plan also calls for the establishment of a periodic reporting system that allows for effective supervision by the Board of Directors of KBFG in light of its increased supervisory role and responsibility.  Furthermore, for effective and efficient operation of the Board of Directors of KBFG, the Board Steering Committee and the Management Strategy Committee serving thereunder will be dissolved and the Corporate Governance Committee will be newly established.

Meanwhile, the core principles that should be observed in nominating and appointing non-executive directors, who are critical to ensuring independence of the Boards of Directors, have been identified as shareholder representativeness, expertise and diversity.  In connection therewith, financial services, accounting, finance, law/regulation, risk management or HR/IT have been identified as the specified areas in which non-executive director candidates should possess expertise and such qualification is to be regularly monitored and actively considered when identifying potential candidates for non-executive director positions.  In addition, in order to enhance communication with its shareholders, KBFG was the first in the industry to offer its shareholders an opportunity to recommend potential non-executive director candidates.  Further, so as to ensure objectivity in the non-executive director appointment process, KBFG has decided to employ executive recruiting firms to manage the pool of non-executive director candidates.  Moreover, in accordance with the Code, internal and external evaluations of non-executive directors will be conducted annually and the two lowest-ranked non-executive directors will be disqualified from reappointment in the year following the evaluations.  In addition, the number of executive directors will be increased from one to two by appointing another executive director in addition to the Chairman and CEO, who had previously been the sole executive director on the Board of Directors, to increase the expertise of the Board of Directors and to ensure stability of corporate governance.

The Chairman and CEO Nominating Committee and the Subsidiary CEO Nominating Committee, which had been temporarily established as ad-hoc committees to help establish procedures for CEO candidate cultivation and CEO succession, have been consolidated into the Corporate Governance Committee serving under the Board of Directors of KBFG.

Lastly, the Group Executive Committee has been established and it consists of approximately ten members, including the Chairman and CEO of KBFG, the executive officer in charge of finance at KBFG and the CEOs of KB Kookmin Bank, KB Kookmin Card, KB Securities and KB Life, as well as executive officers of KBFG and its major subsidiaries who have been appointed to the Group Executive Committee by the Chairman and CEO of KBFG.  The Group Executive Committee is responsible for deliberating and approving the agenda items that will be presented to the Board of Directors of KBFG for its consideration, including business plans and mid-to-long-term  business strategies of KBFG and its subsidiaries, potential M&A or capital investment plans and KBFG’s dividend policy, as well as expansion into a new business, forming strategic partnerships and material issues that require cooperation and coordination among subsidiaries.  Such measures are expected to formalize and reinforce the responsibility and authority of the Chairman and CEO of KBFG with respect to management issues that are crucial to the efficient operation of KBFG as a whole and allow the Board of Directors of KBFG to concentrate on its supervisory role.

The newly announced Plan, according to an official at KBFG, is expected to help stabilize KBFG’s corporate governance, which has lately been unstable, and serve as an opportunity to solidify the basis for long-term value-focused management.

- Nominee for Non-Standing Director