[Biz View] "CEO Evaluation, Chairman Does Not Conduct" SK Chairman Keeps Distance from Affiliate Personnel Affairs

Financial Sector Personnel Season Highlights SK CEO Appointment Results
SK Chairman Chey Tae-won: "Strengthen Board Role... Must Make Independent Decisions"
Contrasted with Domestic Practice Reflecting Chairman and Owner Intentions
Increased Attention on Vice Chairman Chey Jae-won's Return to Management Affiliates

Choi Tae-won, Chairman of SK Group, is making closing remarks at the '3rd Governance Story Workshop' held via video conference last month at the SK Seorin Building in Jongno-gu, Seoul.

[Asia Economy Reporter Choi Dae-yeol] To easily control an organization, one must hold the purse strings and the leash. It means having the authority to decide where to allocate limited resources and who to place in which position is crucial in organizational management. Although the preference for new administrative officers is not as high as before, the Ministry of Strategy and Finance and the Ministry of the Interior and Safety are still highly regarded among central government ministries for this reason.

In this context, SK Group Chairman Chey Tae-won’s recent emphasis on board-centered corporate management gives a somewhat unfamiliar impression. Starting this year, SK has mandated that each affiliate’s CEO candidates be recommended and year-end evaluations and compensations be conducted by their respective boards of directors. There was even a case where an overseas investment proposal approved by Chairman Chey failed to pass the board due to opposition from other directors.

View of SK Seorin Building, the headquarters of SK Group in Jongno-gu. Photo by Moon Honam munonam@

Our society has naturally accepted that the governance structure with the chairman at the top is the same as the decision-making structure, so SK’s move is unfamiliar in reality. A major conglomerate that recently announced affiliate CEO appointments explicitly stated in its press release that the chairman’s will was reflected.

Chairman Chey himself is aware that positioning the board of directors as the highest decision-making body of a company is unconventional. At a recent governance workshop, he said, "There is a gap between the authority the board of directors has under the Commercial Act and the reality of domestic companies," adding, "Unless we resolve this gap that has been overlooked and tolerated, we cannot achieve ESG (Environment, Social, Governance)." He emphasized, "If 99.8% of board proposals pass and the board is criticized as a ‘rubber stamp’ or ‘mannequin board,’ global investors will hesitate to invest. We need to strengthen the role of the board and make the decision-making structures of each affiliate much more independent."

As the year-end personnel season approaches and major group personnel news is announced, attention is focused on SK’s personnel moves for this reason. Since the chairman himself has declared that he will distance himself from affiliate personnel decisions, insiders and outsiders alike speculate whether the upcoming personnel results will reflect Chairman Chey’s intentions.

Choi Jae-won, Senior Vice Chairman of SK, attending CES 2019, is listening to an explanation. / Las Vegas, USA - Photo by Kim Hye-won, Asia Economy

Will Vice Chairman Chey Jae-won Take Over Affiliate Management?
Recognized for Financial, Planning, and Global Business Capabilities Within the Group
Increased Interest in SK’s Succession Structure

Another point of interest in SK’s personnel is whether Vice Chairman Chey Jae-won, Chairman Chey’s younger brother, will return to management. After being released on parole in 2016, he became eligible for full management participation five years later. Vice Chairman Chey is listed as a non-executive director of SK Inc., the group’s holding company, and SK E&S. He stepped down as a non-executive director of SK Networks, the founding company of SK Group, around the end of September.

Vice Chairman Chey studied physics and materials engineering during his school years, then joined the company and later completed an MBA focusing on financing. During the late 1990s, when SK developed and stabilized its telecommunications business, the stock exchange and foreign capital attraction methods, which were uncommon at the time, drew attention, and Vice Chairman Chey is said to have led these efforts. The automotive battery business, which SK is supporting at the group level, is also his area of interest. He is known to have actively worked behind the scenes during the construction of the first electric vehicle battery production base in Georgia, USA, and in negotiations with automakers.

Approaching his sixties in Korean age, Vice Chairman Chey’s return to management is intertwined with SK Group’s succession structure. SK’s governance structure consists of the holding company SK Inc., which also handles investment business, and several intermediate holding companies beneath it. Chairman Chey Tae-won is the largest shareholder of SK Inc., followed by his younger brother Chey Ki-won, chairman of the board, and Vice Chairman Chey Jae-won in terms of individual shareholdings. Since the passing of the late Chairman Chey Jong-hyun in 1998, SK has been led by a joint management structure of the owner family?brothers Chey Tae-won and Jae-won, and cousin Chey Chang-won, vice chairman of SK Discovery?and professional managers.

Choi Chang-won, Vice Chairman of SK Discovery, is giving a greeting at a meeting with Prime Minister Kim Boo-kyum held in August at SK Bioscience in Seongnam, Gyeonggi Province. Photo by Kim Hyun-min kimhyun81@

SK Discovery, led by Vice Chairman Chey Chang-won, is an intermediate holding company with some affiliates such as SK Chemicals and SK Gas, but it has no shareholding relationship with SK Inc., allowing for affiliate separation. The affiliates to which Vice Chairman Chey Jae-won returns can be seen as a clue to the future direction of SK’s governance structure.

However, since Chairman Chey Tae-won has declared that even if the owner family or those with management capabilities exist, he will not create a structure where a specific affiliate is singled out and a CEO is appointed from above, it is highly likely that Vice Chairman Chey will be recommended and brought in by the affiliate’s board of directors to take over management. SK E&S, where Vice Chairman Chey is a non-executive director, recently added an outside director.

Additionally, attention is focused on the personnel of the SUPEX Council, which assists major affiliate decision-making. The SUPEX Council is composed mainly of CEOs and executives of major affiliates, and inside and outside SK, the SUPEX chairman is regarded as the group’s second-in-command. Chairman Cho Dae-sik successfully secured a third term and is reorganizing the business portfolio across affiliates, so many expect him to hold the position once again.

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