Hyundai Motor, Kia, and Hyundai Mobis are introducing a senior outside director system and strengthening board governance.
Hyundai Motor, Kia, and Hyundai Mobis approved the adoption of the senior outside director system at their respective regular board meetings held this month and announced on the 27th that they appointed Shin Dal-hoon as the first senior outside director (Hyundai Motor), Jo Hwa-soon as the senior outside director (Kia), and Kim Hwa-jin as the senior outside director (Hyundai Mobis).
The senior outside director system is a system that enhances the authority and role of outside directors by electing a senior outside director who serves as their representative. In the domestic financial sector, the introduction of the senior outside director system is mandatory under the 'Financial Companies Governance Act.' Although there is no obligation for non-financial corporations to implement the senior outside director system under domestic law, the three companies implemented this system to strengthen the oversight function of outside directors over management and to increase management transparency, allowing the board to make more balanced decisions.
The senior outside director has the authority to convene and preside over meetings attended only by outside directors. They also represent outside directors in requesting management data and reports on current issues from the management and convey the opinions of outside directors to the board and management. Additionally, they facilitate smooth communication among outside directors, management, and shareholders. Hyundai Motor, Kia, and Hyundai Mobis expect that the introduction of this system will enable outside directors to participate more actively in the board's decision-making process.
Alongside this, the three companies established an 'outside board' to ensure the effectiveness of the senior outside director system.
This is aimed at allowing outside directors to independently review and discuss board agenda items before the board meetings, with each company planning to operate an outside board composed entirely of outside directors.
Prior to this, the three companies expanded the proportion of outside directors in their respective boards' compensation committees and the outside director nomination committees at meetings held last month. The aim is to enhance the independence of each committee by centering them around outside directors. The compensation committee deliberates and decides on the compensation limits for registered directors, while the outside director nomination committee is responsible for recommending candidates for outside directors to be appointed at the shareholders' meeting.
By resolution of the board, the compensation committees of the three companies have transitioned to a system consisting entirely of outside directors, while the outside director nomination committees are composed of all outside directors except for one inside director.
With the introduction of the senior outside director system, the establishment of outside boards, and the expansion of the proportion of outside directors in board committees, Hyundai Motor, Kia, and Hyundai Mobis have developed a more transparent management decision-making system.
[OSEN]