South Korea’s top-tier businesses are making hurried moves to secure female figures for their boards of directors, aiming to finalize the appointments for their forthcoming annual shareholders’ meetings later this month.
The key driving factor is the Capital Market and Financial Investment Business Act, which applies enhanced standards for companies’ gender equity and major shareholders’ voting rights.
Under the new rules, which are to take effect in August 2022, listed companies with assets or market capitalization worth 2 trillion won ($1.77 billion) or more will be banned from forming a single-gender board of directors.
Notwithstanding the initial two-year grace period, local businesses are escalating their search for eligible female figures -- not only to conform to the legal requirements but also to keep pace with the growing awareness of the ESG management trend, which stands for environmental, social and governance.
Hyundai Motor, the flagship automaker of the nation’s second-largest conglomerate Hyundai Motor Group, is planning to appoint Lee Ji-yun, aerospace professor at KAIST, as nonexecutive director on March 24.
At Samsung Electronics, incumbent female board member and former Ehwa Womans University President Kim Sun-wook is expected to be reappointed for another term.
SK Holdings, the holding company of No. 3 conglomerate SK Group, has announced recently that it will appoint Kim Seon-hee, CEO of Maeil Dairies, as a new nonexecutive director. Should the appointment be finalized at the annual shareholders’ meeting slated for March 29, it will mark the first time that SK Holdings will have a female member in its outside directorate board since kicking off in 2015.
LG Corp., the holding company of LG Group, is also set to name Lee Soo-young, CEO of Eco Management Korea Holdings, as a nonexecutive director and management consultant at the upcoming shareholders’ meeting on March 26. Other LG affiliates, including major ones such as LG Electronics, LG Chem, LG Household & Health Care, will follow suit in adding female figures to their boards this year and next year.
Out of the 147 companies that possessed assets worth 2 trillion won or more as of last September, only 46 had at least one female member on their board of directors, according to corporate tracker CEO Score.
A separate survey by human resource firm UnicoSearch showed that 70 out of the country’s top 100 companies in assets had an all-male directorate boards.
“Large companies tend to prefer figures from professional backgrounds, such as professors, high-profile business leaders, or former government officials,” said an industry observer.
“Those that fail to make the pick in the early stages (of the new regulations) may later face a much more restricted resource pool.”
Given that nonexecutive directors may serve for a maximum of six years, companies continuously have to find new figures who can fulfill the requirements.
As nonfinancial indexes -- such as the gender spread, environment-friendly business structure, and social responsibilities -- are rising as key variables in investment decisions, the business circle’s search for female figures is expected to prolong, even after the March proxy season.
The world’s largest asset manager BlackRock announced in 2018 that it will refrain from investing in companies that have fewer than two female directors.
By Bae Hyun-jung (email@example.com