For a long time in Korea, the positions of outside directors of large corporations were monopolized by professors, former officials, and legal professionals. In the days when the board of directors was not functioning, it was followed by the practice of matching assortments or honoring the bureaucrats of the ministries involved. However, as the role of the board of directors grows, women, entrepreneurs, and ESG (environmental, social, governance) experts are increasing. It is an assessment that the board of directors of large corporations has emerged from the peak season and has begun to play an important role in strengthening diversity and social responsibility in the decision-making process.
On the 25th, the Korea Economic Daily conducted a thorough survey of the top 100 companies by domestic market capitalization (based on the closing price on the 23rd), and the percentage of women among newly appointed outside directors this year reached 31%. Last year, this rate was only 18%. Considering that the average ratio of female outside directors at the top 100 companies in the market cap is only 12%, the rate of increase is accelerating.
It affected the fact that the number of female executives in each company is increasing, and the Capital Markets Act, which states that from next year, companies (total assets of 2 trillion won or more) should not form a board of directors only with a specific gender.
There are also increasing cases in which managers of other companies are invited as outside directors. Among the outside directors appointed at this general shareholders’ meeting, the proportion of entrepreneurs was counted as 20%. It is the second highest proportion after professors (39%). Hanwha Solutions appointed Lee Han-joo, CEO of Bespin Global, a venture entrepreneur in their 40s, and SK appointed Lee Sun-hee, CEO of Maeil Dairy, as an outside director. In addition, LG Display, Naver, etc. have enlisted ESG experts as outside directors.
Professor Lee Kyung-mook of the Graduate School of Business at Seoul National University explained, “It shows a willingness to increase the proportion of women to secure diversity and to appoint entrepreneurs and ESG experts to show the future of companies.
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“As the responsibilities of outside directors and audit committees are becoming heavier and the number of people who can do them is gradually limited, proposals are coming from various companies. Some professors go to the board of directors of a company where transparency is not high, and they even reject the proposal in case it goes wrong.”
A professor at a major university in Seoul, one of the number one outside directors sought by companies, said this about the rising ransom of outside directors. Companies are raising their eye level, but candidates are not easy to expand. As a result, the number of cases of overlapping outside directors in several locations is leading to an increasing number of cases.
Illustration = Reporter Chu Deok-young [email protected]
○ Focused Love Call
As a result of a thorough survey of the outside directors and audit committees of the top 100 domestic companies appointed this year by the Korea Economic Daily, it was found that 37 people were in charge of outside directors at more than one company. There were still many former high-ranking officials the company preferred most. Former Minister of Knowledge Economy Choi Jung-gyeong, who was appointed as an outside director of Samsung C&T at this month’s shareholders’ meeting, is also an outside director of CJ ENM and an audit committee member. CJ ENM explained, “Experience as the Minister of Knowledge Economy and Chairman of the Korean Certified Public Accounting Association and know-how as a financial expert” as the background of the appointment.
The climate of ‘general courtesy’ is also one of the reasons why companies are recruiting bureaucrats who have held high-ranking positions as board members. Samsung Securities also included in the board of directors Lim Jong-ryong, former chairman of the Financial Services Commission, who is in charge of CJ Logistics’ outside director at this shareholders’ meeting. Former Minister of Trade, Industry and Energy Joo Hyung-hwan was also appointed as an outside director for Hotel Shilla and Hyundai Mipo Shipbuilding.
In addition, Lee Jeon, former deputy head of the National Tax Service, S-Oil and E-Mart, Jung Yong-sun, former deputy head of the Financial Supervisory Service, is Mirae Asset Securities and Kumho Petrochemical, and Lee Seok-joon, former head of the State Affairs Coordination Office, is the outside director of SKC and LF. Even former entrepreneurs are receiving love calls from various companies. Former Naver CEO Kim Sang-hyun was named outside directors of LG and its elegant brothers, and Lee Woong-beom, former head of LG Chem’s battery business division (president), was named on the board of directors of POSCO Chemical and Hyunwoo Industries.
○ Plant innovation DNA for entrepreneurs
The composition of outside directors preferred by companies is also changing. While the proportion of professors and financiers decreased this year, the proportion of senior entrepreneurs increased from 10% last year to 20%. It has been remarkable that large corporations have relatively young managers from the venture industry as outside directors. Hanwha Solutions’ outside director and audit committee member of Hanwha Solutions, Lee Han-joo, CEO of Bespin Global (49), is representative. Bespin Global is a cloud delivery platform company that provides services such as migration, deployment, and operation management to a cloud environment. The board of directors of Hanwha Solutions explained that the reason for Lee’s appointment was “I have experience in successfully operating a number of companies in the US and in Korea,” and “we have expertise in digital transformation that the company is actively pursuing.”
Big Hit has four thirty-three minutes, Park Young-ho, who served as CEO of startups such as Joy City, and LG Uplus, who was formerly McKinsey & Company consultant, Je Hyun-joo, CEO of Yellow Dog (44), outside director. Was elected. Professor Lee Kyung-mook of Seoul National University Business School added, “In the United States, where businessmen are preferred over bureaucrats, there are research results that if businessmen are recruited as outside directors, they can play a role as a channel to spread innovation.”
○ Women’s progress is also outstanding
The advancement of female entrepreneurs was also noticeable. SK has hired Kim Sun-hee, CEO of Maeil Dairy (57), and LG has recruited ESG (environmental, social, governance) expert Lee Soo-young, former Kolon Ecoone CEO (53). Competition among companies for female outside directors is also intensifying. This is the reason for the announcement of the appointment of the’first female outside director’ at the shareholders’ meeting this year. According to the company evaluation site’s CEO Score, 31 large domestic companies have raised the agenda for the appointment of the first female outside directors at this year’s shareholders’ meeting. As a result of analyzing the top 100 market caps, a total of 33 female outside directors were appointed this year. “As the paradigm of the industry has changed dramatically since Corona 19, companies have deepened their worries about how to diagnose the business structure and what new industries to enter.” This is the reason why the number of cases of recruiting is increasing.”
Reporter Park Jaewon/Go Jaeyeon/Jeon Bumjin [email protected]