[Column] "Who Should We Invite as Outside Director?"

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] As the new government is about to launch, cabinet nominees are being appointed one after another, and unexpectedly, their experience as outside directors has come under scrutiny in the political sphere.

Following Han Duck-soo, the Prime Minister nominee who resigned as an outside director of S-Oil immediately after his nomination, Kim In-chul, Deputy Prime Minister and Minister of Education, Lee Chang-yang, Minister of Trade, Industry and Energy, Lee Sang-min, Minister of the Interior and Safety, Park Bo-gyun, Minister of Culture, Sports and Tourism, and Han Hwa-jin, Minister of Environment, all share the commonality of having served as outside directors until just before their nominations.

Outside directors participate in a company's board as external members to act as a counterbalance, ensuring that corporate management does not fall prey to the arbitrary or excessive control of major shareholders. Although they receive high compensation, they have not been free from criticism as 'rubber stamps' when they fail to serve as proper monitors or advisors.

Ahead of the parliamentary confirmation hearings starting on the 25th with nominee Han Duck-soo, the political circles are threatening to scrutinize their abilities and morality based on their records as outside directors, following the same logic.

In Han's case, the main issue raised is that he voted in favor of all agenda items at the S-Oil board meetings. According to S-Oil's business report last year, Han attended four board meetings after being appointed as an outside director in March last year. It was confirmed that he voted in favor of all agenda items presented at those meetings.

However, the business community's view is that an outside director, who reviews and decides on major management strategies, cannot simply oppose everything unconditionally.

Looking at the agenda items of S-Oil's board, important matters such as approval of interim dividends, implementation plans for the Serious Accidents Punishment Act, and expansion of the Magok Technology Development Center (TS&D) were handled. These were related to shareholder return policies and securing new growth engines, and did not require opposition.

Concerns about whether fairness can be maintained in future policy formulation and execution when many cabinet members have backgrounds as outside directors of specific companies are fully understandable. However, it is also time for the political sphere to listen to the criticism that focusing solely on outside director experience to devalue nominees, without engaging in constructive discussions to resolve the 'rubber stamp' controversy, is excessive.

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