Establishment of "Independent Directors' Board" Comprised Only of Independent Directors
Compensation Committee Composed Entirely of Independent Directors
Enhancing Board Transparency in Corporate Governance
Hyundai Motor, Kia, and Hyundai Mobis are introducing a lead independent director system and strengthening their board governance.
On April 27, Hyundai Motor, Kia, and Hyundai Mobis announced that they had approved the introduction of the lead independent director system at their respective regular board meetings held this month. The inaugural lead independent directors are Shim Dalhoon (Hyundai Motor), Cho Hwasoon (Kia), and Kim Hwajin (Hyundai Mobis), who have each been appointed as lead independent directors for their respective companies.
The lead independent director system is a framework in which a representative lead independent director is elected among the independent directors to strengthen the authority and role of independent directors. In the domestic financial sector, the lead independent director system is mandatory under the Financial Company Governance Act.
Although non-financial companies in Korea are not required by law to introduce the lead independent director system, the three companies have adopted it to enhance the independent directors' ability to monitor management, increase management transparency, and help the board make more balanced decisions.
The lead independent director has the authority to convene and preside over meetings attended only by independent directors. The lead independent director also represents the independent directors in requesting management data and reports on current issues from the management, and consolidates the opinions of independent directors to deliver them to the board and management. In addition, the lead independent director facilitates smooth communication among independent directors, management, and shareholders.
Alongside this, the three companies have also established an "Independent Directors' Board" to ensure the effectiveness of the lead independent director system. This is intended to allow independent directors to independently review and discuss board agenda items before board meetings. Each company plans to operate this board composed entirely of independent directors.
Previously, last month, the three companies expanded the proportion of independent directors in the board's Compensation Committee and Independent Director Nomination Committee through resolutions at their respective board meetings. The aim is to increase each committee's independence by centering the board committees around independent directors. As a result, the Compensation Committees of all three companies have been converted to a structure composed solely of independent directors, and the Independent Director Nomination Committees are now composed entirely of independent directors except for one inside director.
The three companies have also already introduced and are operating a shareholder-recommended independent director appointment system, in which shareholders can recommend candidates for independent directors. Shareholder-recommended independent directors serve as communication channels between the board and shareholders in their role as committee members responsible for protecting shareholder rights, and are tasked with protecting and enhancing shareholder interests.
In addition, all committee chairpersons under the board are appointed from among the independent directors to ensure committee independence and transparency in decision-making. At the regular general shareholders' meeting held last month, Hyundai Motor further strengthened the board's corporate management expertise by newly appointing three independent directors with backgrounds as business executives, rather than from academia or government agencies.
The newly appointed independent directors, Kim Sooee and Benjamin Tan, are experts in finance, accounting, and capital markets, having served as Global Head of Private Equity at the Canada Pension Plan Investment Board (CPPIB) and Asia Portfolio Manager at GIC (Government of Singapore Investment Corporation), respectively. Do Jinmyung, another independent director, is a former Vice President of Qualcomm Asia and is recognized for his extensive experience and expertise not only in semiconductors but also in AI and hydrogen technologies.
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