Hyundai Motor Company, Kia, and Hyundai Mobis are introducing a senior independent director system and strengthening board governance.
Hyundai Motor Company, Kia, and Hyundai Mobis approved the introduction of the senior independent director system during their respective regular board meetings held this month and appointed Shin Dal-hoon, independent director (Hyundai Motor Company), Cho Hwa-sun, independent director (Kia), and Kim Hwa-jin, independent director (Hyundai Mobis), as the first senior independent directors, the companies noted on the 27th.
The senior independent director system is designed to enhance the authority and role of independent directors by electing a senior independent director, who represents independent directors. In the domestic financial sector, the introduction of the senior independent director system is mandatory according to the 'Financial Companies Governance Act.'
Under domestic law, non-financial corporations are not required to introduce a senior independent director system, but the three companies of Hyundai Motor Group adopted the system to strengthen the management oversight function of independent directors, enhance management transparency, and ensure the board can make more balanced decisions.
The senior independent director has the authority to convene and preside over meetings attended solely by independent directors. They also request management to report on management data and current issues on behalf of the independent directors and gather their opinions to relay them to the board and management. Additionally, they facilitate smooth communication among independent directors, management, and shareholders.
The three companies of Hyundai Motor Group expect that the introduction of the system will allow independent directors to participate more autonomously in decision-making processes of the board.
The three companies established a 'board of independent directors' to ensure the effectiveness of the senior independent director system. This initiative is aimed at allowing independent directors to independently review and discuss board agenda items prior to board meetings, and each company plans to operate the board of independent directors composed entirely of its independent directors.
Prior to this, the three companies expanded the proportion of independent directors in the remuneration committee and the independent director nomination committee during last month's respective board meetings. The intention is to enhance the independence of each committee by structuring them around independent directors.
The remuneration committee is responsible for reviewing and deciding on the remuneration cap for registered directors, while the independent director nomination committee is tasked with recommending candidates for independent directors to be appointed at the shareholders' meeting. By board resolution, the remuneration committee for the three companies has transitioned to a system composed entirely of independent directors, while the independent director nomination committee has been formed with all but one internal director being independent directors.
With the introduction of the senior independent director system, the establishment of the board of independent directors, and the increase in the proportion of independent directors in board committees, the three companies have improved their corporate governance structure to enable a more transparent management decision-making process.