SK Corp., the holding company of the SK Group, gives outside directors the authority to decide on personnel and strategies following the audit. This is to make the board-centered management practical by actively engaging outside directors in key decision-making. It is known that the strong will of SK Group Chairman Choi Tae-won (pictured), who set out to strengthen ESG (environmental, social and governance), is reflected. Following the’Financial Story’ that Chairman Choi emphasized last year, it is evaluated that it threw a new topic of’Governance Story’.
Outside directors have the right to recommend the CEO
SK Corp. announced on the 25th that it has decided to establish the’Human Resources Committee’ and the’ESG Committee’ under the board of directors. The role of the HR committee is to recommend and evaluate candidates for the CEO and outside directors. If the appointed CEO determines that he or she is not performing his or her role, a replacement agenda can be proposed even during the term of office. The HR committee even holds the CEO’s’right to impeach’ and acts as a check on a regular basis.
In addition, the authority to deliberate on compensation for internal directors is given. At the general shareholders’ meeting, the total amount of remuneration is set, and the HR committee intervenes before the board of directors decides a specific amount. For example, if a company charges excessive compensation, the HR committee may demand that the amount be lowered. The HR committee is led by outside directors. Of the three committee members, two outside directors are assigned and one is an inside director.
The core role of the ESG committee, which is established along with the HR committee, is investment deliberation. The existing governance committee is transferred to the ESG committee. Investments that do not conform to the ESG management pursued by the group may be rejected by the ESG Committee. It is explained that the ESG Committee can stop it if the company decides to invest in a business that destroys the environment or to do a new business that is socially criticized. The ESG Committee consists of five outside directors and one inside director. Like the HR committee, it is led by outside directors. The newly-established committee will be operated in earnest from next month after going through the shareholders’ meeting on the 29th and the board of directors on the 30th.
Two days of discussion on the change of company name
SK Corp.’s board of directors has already exercised greater power than other companies. The Audit Committee and the Governance Committee, which are composed of outside directors, are deliberating on investments of over 130 billion won (more than 1% of equity capital). A company official said, “At least in SK, the word’outside director is a big success’ doesn’t make sense.” In fact, they actively disagree on some agenda items. The proposal to change the company name in English, which was recently posted on the board of directors, was discussed over two days. Outside directors reviewed numerous overseas cases one by one to determine the suitability between the company’s value and the English mission, and then confirmed post-security with’SK Inc.’ minus’Holdings’.
SK Corp.’s strengthening of the board of directors’ functions is expected to affect other affiliates. SK Corp., where Chairman Choi is the only registered director, is at the top of the group’s governance structure. Some subsidiaries have already expanded their roles as outside directors. SKC established an internal transaction committee, ESG committee, personnel committee, and audit committee under the board of directors, and transferred all the chairpersons to outside directors.
SK Innovation also has an outside director as chairman of the board of directors since last year. An SK official said, “As the group policy to strengthen ESG management has been established, the work to improve the governance structure of each affiliate will be carried out more actively.”
Reporter Ahn Jae-kwang [email protected]
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