Value context and insight. lkm@koreatimes.co.kr
Will LG Display, SK hynix benefit from industry minister nominee?
President-elect Yoon Suk-yeol's nominee for minister of trade, industry and energy, Lee Chang-yang. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
LG Display, the display panel unit of LG Group, and SK hynix, the semiconductor unit of SK Group, are attracting keen attention as to whether they will benefit from the nomination of Lee Chang-yang as minister of trade, industry and energy in the Yoon Suk-yeol administration, according to market watchers Tuesday.
Underpinning expectations for closer cooperation and communication is Lee having served as an outside director at the two firms for a combined nine years: six years at SK hynix and three years at LG Display. Other than the LG and SK affiliates, Lee also served as an outside director for five years at Tokai Carbon Korea, the Korean subsidiary of Japanese carbon and graphite product manufacturer Tokai Carbon.
Lee received a combined 800 million won ($647,500) from the three firms over the past 13 years, during which time he passed 284 of 285 motions put up for vote.
The overwhelming number of yes votes by Lee have brought to the fore the longstanding social ill of outside directors being reduced to the position of a rubber stamp, representing the failure of the position to serve as a disinterested party that balances out the emperor-like, centralized power at the top of the corporate ladder.
This disappointing, highly concerning reality is borne out by 2020 data from CEOSCORE, a corporate data service provider, which revealed a 99.53 percent approval rate by outside directors at 277 listed affiliates of Korea's 64 large conglomerates. The approval rate was 99.61 percent in 2019.
Critics say that a major overhaul of the makeup of committees that recommend outside directors will help resolve the problem.
“The committees are criticized for being under the heavy influence of the owners of the firm or other inside directors close to them. Limiting outside directors to a single term only would help dispel the concerns,” said Kwon Oh-in, the economic policy director at the Citizens Coalition for Economic Justice (CCEJ).
Conflict of interest
Industry officials say Lee is expected to help businesses better navigate challenges both from within the country and abroad in the years to come amid fierce competition in the global market.
“Lee has a deep understanding of industrial policies and relevant experience of over three decades. He is also well versed in global trade and industry dynamics, a strength for local firms mapping out long-term strategies,” a display industry official said.
However, the industry-wide optimism is being undercut by criticism that Lee has sought to dismiss the issue of conflict of interest while holding the highly paid corporate position and remaining as a key policymaking authority at the same time, a controversy brought on by reports that he secured a second term at LG Display on March 23, just six days after he had joined the presidential transition committee.
Lee said he would reject the outside director position, Monday, adding his view that the issue of conflict of interest is overblown and largely lacks grounds.
“The roles of an outside director and that of a minister are clearly different,” he said. “I will explain in detail during the confirmation hearing.”
LG Display spokesperson and SK hynix spokesperson declined to comment.