[Who Picks the Bank President]②Holding Companies Oversee CEO Appointments in the US Too... Key Difference with Korea Is "Ongoing Evaluation"

JPMorgan: Holding Company Board Oversees Succession of Bank Subsidiary Executives

Fed Emphasizes Board Responsibility Over Detailed Procedures

Japan: Holding Company Reviews Appointments for Key Subsidiaries

Recently in South Korea, concerns have been growing that the process for appointing CEOs of subsidiaries, particularly those under financial holding companies, involves only a superficial review by subsidiary boards of directors. In contrast, in the United States and Japan, more weight is placed on how independently and over what duration the board of directors identifies and evaluates CEO candidates, rather than emphasizing the holding company’s involvement in the executive selection or succession process. In these countries, it is not uncommon for one individual to simultaneously serve as both the group chairman and the president of a bank. The core difference does not lie in restricting the holding company's involvement or in strengthening the authority of either the holding company or subsidiary boards. Instead, it is in transparently operating the personnel and succession functions of the holding company through formal, board-centered processes that are insulated from the influence of any single individual.

According to the financial industry on September 29, the U.S. Federal Reserve requires in its supervisory guidelines for large financial holding companies that the holding company's board of directors oversee senior management and continuously review CEO succession plans. However, it leaves to each company the specific methods for identifying and grooming successors, acknowledging that each financial company's business structure, risk profile, and complexity differ, making it difficult to apply uniform detailed standards. This so-called “principle-based approach” prevails.

In the United States, there are also quite a few cases where the same individual serves as CEO of both the financial holding company and its core banking subsidiary. For example, Brian Moynihan serves as chairman and CEO of Bank of America Corporation, the holding company, while also serving as CEO of its main bank subsidiary, Bank of America, N.A. Jamie Dimon is both the chairman and CEO of JPMorgan Chase & Co., the holding company, and the CEO of JPMorgan Chase Bank, N.A., its core banking subsidiary. This structure is quite different from one where the management teams of the holding company and the bank are strictly separated.

Another notable feature is the long tenure of these leaders. Dimon has led JPMorgan Chase for over 20 years, and Moynihan has served as CEO of Bank of America since 2010. The CEO succession structure of major U.S. financial companies differs from the South Korean practice, where CEO reappointment becomes an issue every two to three years at the end of a set term. The U.S. model is closer to one in which the board of directors continuously evaluates the current CEO’s performance while also separately nurturing and managing a pool of potential successors.

The most significant difference with South Korea lies in how the holding company’s board manages succession candidates. At JPMorgan, succession planning is not a procedure that begins as a CEO’s term nears its end, but rather an ongoing responsibility of the board of directors. The Compensation & Management Development Committee (CMDC) under the holding company's board regularly reviews talent management programs, including the development and external recruitment of key executives and succession planning. Potential candidates are given opportunities to run different businesses or larger organizations to assess their actual management capabilities and gain experience in various fields.

CEO tenure and successor development also proceed concurrently. This means that even as Dimon continues to serve as CEO, the pool of successor candidates is managed on an ongoing basis. This year, JPMorgan’s decision to promote Doug Petno and Troy Rohrbaugh to co-presidents, assigning them to lead core businesses, is seen as part of this broader succession management approach. While South Korea tends to focus heavily on narrowing down candidates and reappointment issues only as a CEO's term expires, the U.S. continuously develops a pool of successors regardless of the current CEO’s tenure.

Japan: Holding Companies Play a Significant Role in Bank Leadership and Succession

What is particularly emphasized in the United States is the board’s substantive independence. The New York Stock Exchange (NYSE) requires a comprehensive assessment of whether board members have significant interests in the company or its management, with the same independence standards applying to listed financial firms. By regulation, individuals who have been employees or executives of the company within the past three years cannot be considered independent directors, and those receiving direct compensation above a certain level are also restricted. Significant business, financial, or consulting relationships with the company, or familial ties, are additional factors limiting a director’s independence.

Japan has a similar structure in which the holding company’s board is directly involved in the executive appointments of key subsidiaries. For example, the Nomination and Governance Committee of Mitsubishi UFJ Financial Group (MUFG) reviews executive appointments not only for the chairman and group CEO of the holding company but also for major subsidiary CEOs and provides recommendations to the holding company board. This committee also directly establishes and operates succession plans for the next generation of executives.

Candidate screening is also carried out over a long period. The committee manages the candidate pools for the holding company and its key subsidiaries by generation and specifies the competencies required for each position. They evaluate candidates’ career backgrounds, performance, and professional skills, also leveraging assessments by external institutions. While the group CEO sits on the Nomination and Governance Committee, the committee is chaired by an independent outside director.

This content was produced with the assistance of AI translation services.