Korean Internet Banks’ Boards Rarely Dissent Despite 70% Outside Directors

South Korea’s internet-only banks have boards where outside directors make up nearly 70%, yet most agenda items are still approved unanimously, according to a review of recent filings. Over the past three years, Toss Bank recorded the most dissenting votes, but only six in total. Industry observers say the boards’ oversight role is unlikely to strengthen unless the process for recommending outside directors changes.

An analysis of the past three years of “annual reports on governance and compensation systems” for the three internet-only banks — Toss Bank, K Bank and KakaoBank — posted on the Korea Federation of Banks website showed Toss Bank had five dissenting opinions last year and one in 2024, for six overall.

At Toss Bank, five dissenting opinions were recorded among 119 board resolutions last year. Four were raised at a January board meeting by Lee Kun-ho, an outside director and a former KB Kookmin Bank president. Lee opposed approval of a 2025 stock option grant plan; convening a first extraordinary shareholders meeting in 2025 and setting the record date; approval of canceling stock option grants; and an agenda item to revise internal rules.

Since launching in 2021, Toss Bank has granted stock options to employees in 19 rounds through September last year. In April last year, it introduced a program allowing employees to swap part of their year-end bonus (1 million won) for stock options. The stock options included a condition barring resignation for two years, and 372 of about 700 regular employees reportedly chose the program. The industry has speculated that disagreements may have surfaced on the board during the process of adopting the program.

K Bank, despite having the highest outside-director ratio at 73%, had no dissenting votes on board resolutions over the past three years, the analysis found. KakaoBank recorded two dissenting opinions over the same period. In 2023, outside director Lee Eun-kyung opposed agenda items on support measures for victims of rental fraud and approval of revisions to a shared-growth agreement. There was also one case in which an item was put on hold: In June last year, directors agreed to defer a proposal on an affiliate contract for employee corporate and welfare card use, citing the need for additional review and discussion. The resolution was later taken up at the eighth board meeting.

Kim Dae-jong, a professor in the business administration department at Sejong University, said outside directors are selected by bank employees, creating a structure in which “they have no choice but to agree close to 100%,” making dissent effectively difficult.