Foreign Outside Directors’ Presence at Board Meetings Low
By Park Hyong-ki
Staff Reporter
Foreign outside directors have continued to show a low attendance record at corporate board meetings over the last three years, according to the Korea Corporate Governance Service (KCGS).
There are 56 foreign outside directors at 652 listed-companies in Korea, and only 45 percent of them managed to show up to meetings from 2004-2006.
Of the listed-companies, Dongkuk Steel, SeAH Besteel and Kumho Tire didn't see any of their foreign directors attending meetings throughout those years.
LG Philips LCD and Kookmin Bank had the perfect participation rate of 100 percent from their foreign outside directors.
``The main reason behind foreigners' low attendance is that most of them live outside Korea and are unable to fit traveling here for the meeting on their schedule,'' said Yoon Jin-soo, a researcher at KCGS.
He added that because of their low presence at board meetings, they are bound to have a ``weaker say'' in management and operations.
Meanwhile, the service said Korean outside directors have been increasing their presence at board meetings over the same period.
There are a total of 1,416 Korean outside directors at 652 firms, and 76 percent of them appeared at last year's meetings, up from 75 percent and 73 percent in 2005 and 2004, respectively.
Overall, 164 companies including SK Corp. (SK Energy), STX Engine and Samsung SDI had full participation from their outside directors at last year's board meetings.
Twenty-two companies, including Muhak Alcohol, Shinhan Engineering & Construction, Greensoft Chem and Duzon BizOn, found seats for their outside directors empty at all times.
Companies such as Doosan, Hyundai Merchant Marine and Hansol LCD saw the rates of outside directors' participation fall short of the average 70 percent for the total of 1,472.
Those who sat on an outside director's chair were mostly recommended by creditors, shareholders and board of directors of a company.
Yoon said Korean companies still lag behind in upholding a sound governance structure utilizing outside directors who are needed for independent monitoring and scrutinizing management as well as contributing to strategic decisions.
Korean companies introduced the outside director format in 1998 as part of moves to improve corporate governance but it has been viewed by many as just a ``rubber stamp.''