SK Internal and External Directors to Strengthen Governance Beyond Global Standards
Chairman Chey Tae-won: "We Must Prove Governance Transparency to the Market to Build Long-Term Trust"
[Asia Economy Reporter Yoonju Hwang] SK Group has decided to create a Governance Story aimed at strengthening board management beyond global standards. In line with this, the boards of directors of SK Group’s affiliates will actively engage not only in monitoring and checking executives such as the group head but also in the entire process from CEO candidate recommendation and appointment to evaluation and compensation. They will also actively communicate with various stakeholders to reflect market demands.
According to SK on the 11th, Chairman Chey Tae-won and inside and outside directors of 13 affiliates, including SK Inc., held three 'Governance Story Workshops' from June to recently, discussing in detail the enhancement of board roles and capabilities and communication methods with the market to promote 'governance innovation' at the group level.
The 'Governance Story' refers to a series of processes and strategies to innovate governance, the G in ESG management, to the highest global standards. Since Chairman Chey proposed it as a key management agenda earlier this year, each company has been creating its own 'Governance Story' through communication with stakeholders such as shareholders and members.
After three rounds of in-depth discussions, the boards of SK affiliates agreed that governance should be innovated centered on the board of directors so that it can fulfill its authority and responsibility as an independent supreme decision-making body.
In particular, there was consensus on the need to strengthen the role of outside directors to monitor and check management, and they decided to actively promote ▲strengthening outside directors’ capabilities through educational programs ▲discovering outside director candidates with expertise ▲sharing company management information and expanding communication with executives.
At the third workshop held on the 7th, there was active agreement on SK Inc. and others establishing ‘Personnel Committee’ and ‘ESG Committee’ under the board of directors this year, entrusting key management activities such as ▲CEO evaluation and candidate recommendation ▲review of inside directors’ compensation appropriateness ▲review of mid- to long-term growth strategies to the board, thereby practicing board-centered management. They decided to expand such measures to other affiliate boards as well.
Accordingly, from the end of this year, CEO evaluation and compensation will be decided by each company’s board of directors within SK Group.
During the workshops conducted remotely via video conference, outside directors proposed various measures to create a more transparent and practical working board, with Chairman Chey and CEOs adding their opinions.
Kim Jong-hoon, outside director and chairman of SK Innovation’s board, said at the third workshop on the 7th, "Inside directors have limitations in supervising management due to their relationship with the CEO, so the role of outside directors is important. For this, not only expertise but also a proactive sense of ownership and participation in company management are necessary."
Lee Chan-geun, outside director and shareholder communication committee member of SK Inc.’s board, emphasized, "When meeting domestic and foreign shareholders and investors, there seems to be great interest in potential conflicts of interest between holding companies and subsidiaries, as well as CEO evaluation and compensation processes. We must build market trust through sufficient communication and information provision."
Chairman Chey Tae-won also stated, "The core of the Governance Story is to prove governance transparency to the market and thereby gain long-term trust." He expressed hope that "outside directors will attend IR events (investor relations meetings) with the CEO to communicate with the market and also engage more with internal members."
Chairman Chey also proposed establishing a 'communication platform' where inside and outside directors of group affiliates can frequently exchange opinions on governance and management issues and enhance their professional capabilities, using the workshop as an opportunity. Earlier, through the first and second workshops, Chairman Chey urged that "outside directors actively play a role in building advanced governance at the highest global level in each company."
Meanwhile, SK Group has consistently made efforts to strengthen board authority and the role of outside directors since transitioning to a holding company system in 2007. As a result, among the 17 affiliates of the SUPEX Council, 10 listed companies currently have outside directors making up nearly 60% of their boards, and seven of these have outside directors serving as board chairs.
There are increasing examples demonstrating the practical operation of board independence and management transparency. A representative case was in August at the SK Inc. board meeting, where inside director Chairman Chey Tae-won and outside director Lee Chan-geun voted against an overseas investment agenda, but the remaining directors approved it. Recently, at the SKC board meeting, an investment agenda for a joint venture with a UK silicon anode material producer to enter the secondary battery anode material market was rejected due to opposition from some directors.
An SK Group official said, "We plan to make sincere and continuous efforts to complete premium-level governance that earns market trust and support."
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