Filling Female Executives as 'Outside Directors' to Meet Board Gender Criteria (Comprehensive)

'2021 Listed Companies Gender Executive Status' Female Executives in Listed Companies 5.2%
Companies Appointing Female Registered Executives Increase by 25.3%p Ahead of Capital Market Act Enforcement
Companies with Assets Over 2 Trillion KRW Show Largest Increase in Female Outside Directors (12.2%)
38 Companies Over 2 Trillion KRW Newly Appointed at Least One Female Registered Executive This Year

[Asia Economy Reporter Han Jinju] More than half of companies with assets exceeding 2 trillion won have secured at least one female executive director. This comes as a large number of female executives were appointed in line with the enforcement of the Capital Markets Act next August, which stipulates that boards of directors cannot be composed of a single gender. Among female executive directors, outside directors accounted for 12%, while inside directors were only 1.2%.

On the 5th, the Ministry of Gender Equality and Family announced the results of the "2021 Gender Status of Executives in Listed Companies" survey. The ministry also revealed trends in the gender composition of executives in companies with total assets of 2 trillion won or more, in relation to the special provisions on board gender composition under the Capital Markets Act, which will be applied from next August.

Companies Increased Female Executive Directors... But Female Inside Directors Only 1.2%

Among 152 companies subject to the Capital Markets Act, 85 companies (55.9%) appointed at least one female executive director. Last year, only 45 out of 147 companies (30.6%) met the Capital Markets Act criteria, marking a 25.3 percentage point increase within a year.

Among all executive directors in companies with total assets of 2 trillion won or more, women accounted for 8.3%, and among all executives, the female ratio was 5.7%. These figures increased by 3.5 percentage points and 1.2 percentage points respectively compared to last year. 118 companies (77.6%) appointed at least one female executive, a double-digit increase of 10.9 percentage points.

However, when limited to inside directors who make key management decisions, the proportion of female executives was only 1.2% (5 people). The proportion of outside directors, who are external to the company, was 12.2%, up 5.2 percentage points from last year.

With the enforcement of the Capital Markets Act from next August, which prohibits boards from being composed of only one gender, the proportion of female executives has increased, but most companies filled the female executive ratio with outside directors to meet the requirements.

Kim Kyung-sun, Vice Minister of the Ministry of Gender Equality and Family, explained, "The larger increase in the proportion of female executive directors compared to non-registered executives, and the fact that female executive directors were mainly appointed as outside directors, is analyzed as a complex effect of the special provisions of the amended Capital Markets Act and the newly established six-year term limit for outside directors under the Commercial Act in 2020."

There were 38 companies that had no female executive directors until last year but newly appointed at least one female executive director this year. These include Hyundai Motor, Hyundai Construction, Hyundai Glovis, Hyundai Mobis, Kia, Samsung Life Insurance, LG Electronics, LG Uplus, LX Hausys, GS Construction, SK, SK Networks, SK Rent-a-Car, E-Mart, Hanwha, Hanwha Aerospace, CJ Logistics, CJ CheilJedang, and POSCO.

Among companies with assets over 2 trillion won, only 10.6% have two or more female executives. The majority, 88.2%, have only one female executive. Only one company has four female executive directors.

Vice Minister Kim said, "Considering the expanding social participation of women, their advancement into decision-making positions in the private sector is still insufficient. Enhancing gender diversity in decision-making positions within companies is recognized as an important value through ESG management, and companies need efforts to improve and change perceptions to increase gender diversity."

Overall Female Executive Ratio in Listed Companies is 5.2%... 6 out of 10 Companies Have No Female Executives

Among 22,46 listed companies, out of 32,005 executives, the proportion of female executives (including registered and non-registered) was 5.2% (1,668 people), up 0.7 percentage points from the previous year. The number of companies appointing female executives rose slightly to 815, an increase of 2.8 percentage points.

Among listed companies, 1,431 companies (63.7%) have no female executives, accounting for 6 out of 10 companies. The female executive ratio in all listed companies is mostly single-digit. Among registered executives, it is 4.8%, and among non-registered executives, 5.5%. Female inside directors account for 4.6%, and female outside directors for 5.2%. The increase in outside directors (1.2 percentage points) is the highest.

Expanding to all female workers in listed companies (406,631 people), the female executive ratio is only 0.41% (1,668 people). This is one-sixth of the executive ratio compared to male workers (2.57%). There is one female executive per 244 female workers, but one male executive per 39 male workers. The gender gap in the ratio of executives to workers is 6.3 times higher for men.

There are also calls for awareness improvement so that companies can voluntarily achieve gender diversity rather than just meeting quotas. Regarding this, Vice Minister Kim said, "Recently, ESG management has become an important global issue, and companies may feel burdened by this. Under the name of the Gender Balance Inclusive Growth Partnership, we provide consulting to companies to help manage gender-balanced personnel and support education for female leaders. This disclosure will also serve as a stimulus for companies."

Meanwhile, industries with a high proportion of female workers are education services, wholesale and retail trade, business support and rental services, and finance and insurance, in that order. Industries with a high proportion of female executives are education services, scientific and technical services, information and communication, and wholesale and retail trade. In education services and wholesale and retail trade, the ratio of female executives to female workers was low at 0.34% and 0.22%, respectively.

This content was produced with the assistance of AI translation services.