Antitrust authorities on Sunday raised questions about the role of outside board directors as corporate watchdogs, despite a slight increase in their number at large firms here.
According to a report from the Fair Trade Commission, the portion of outside directors at the nation’s top 35 owner companies was 47.5 percent as of June 30, up from 46.3 percent a year earlier.
The average at the nation’s total 735 listed firms was 39.7 percent.
The antitrust regulator, however, pointed out that their increased number has not led to them playing a more active role in protecting share value or keeping executive management from abusing power.
Of the 2,020 agenda submitted for directors’ vote at the top 79 companies, only one item was rejected due to the opposition of outside board directors, the FTC said.
Of the 218 companies subject to the compulsory system recruitment of outside directors, which was introduced in 1998, 47.2 percent had a neutral committee to name eligible candidates. But the portion of those that have non-binding surveillance organizations for their activities was only 10 percent, the FTC found.
“Despite an increase in their number, it is questionable whether outside directors are effectively checking the management of dominant shareholders,” said a FTC official, hinting at a revision to the current law.
The FTC also said that companies make little efforts to protect the interests of minority shareholders.
When it comes to the cumulative voting system that allows minority shareholders to cast all their votes for a single outside director candidate, only 3.7 percent of the 218 companies have adopted it, the FTC said.
By Lee Ji-yoon (
jylee@heraldcorp.com)
