Samsung Group subsidiaries are pushing forward with a plan to appoint their CEOs and the chairpersons of their boards of directors (BODs) separately.
The plan aims to accomplish a transparent and responsible management as well as enhance the independence of their BODs. Up to present, CEOs have been appointed as the chairpersons of the BODs.
According to industry sources, major subsidiaries of the Samsung Group such as Samsung Electronics, Samsung SDI and Hotel Shilla will place a plan to revise regulations on the appointment of the chairperson of the BOD on the agenda in their regular general shareholders meetings to be held this March.
The gist of the plan is to make a change in the articles of incorporation. Now, a CEO automatically becomes the chairperson of the BOD of his or her company. But the change will make it obligatory to appoint a director as the chairperson of the BOD through a resolution by the board.
Samsung Electronics will make such a change in its regular general shareholders meeting on March 11. Now, Kwon Oh-hyun, CEO of Samsung Electronics is the chairperson of the BOD of Samsung Electronics.
The same goes for Samsung SDI and Hotel Shilla. The two will bring up the same issue in their regular general shareholders meetings on the same day. Currently, president Cho Nam-sung of Samsung SDI and president Lee Bu-jin of Hotel Shilla are the chairpersons of their companies’ BODs.
The change in the articles of incorporation will make it highly likely to appoint an outside director as the chairperson of the BOD. This is because there is no reason for making a change in their articles of incorporation if the presidents continue to remain the chairpersons of the BODs.
Usually, the separation of a CEO and the chairmanship of the BOD of his or her company can reinforce the independence of the BOD which supervises management on behalf of shareholders. But at the moment, most Korean companies are adopting systems which appoint CEOs as chairpersons of the BODs for operational efficiency.
With such changes expected at Samsung Electronics, Samsung SDI and Hotel Shilla, people are paying attention to whether or not other Samsung Group subsidiaries will make similar decisions.
Financial subsidiaries of the Samsung Group such as Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Card and Samsung Securities made such a change in their articles of incorporation in 2006. Now outside directors are the chairpersons of the BODs of these companies.