Half of Domestic Large Corporations Do Not Specify CEO Succession Principles

LeadersIndex, Analysis of CEO Succession Policies

More than half of the major domestic conglomerates have not explicitly stated specific principles related to CEO succession in accordance with the Corporate Governance Report standards.

Leaders Index, a corporate analysis research institute, announced on the 5th that this was revealed after analyzing the reports of 205 companies that submitted Corporate Governance Reports among the top 500 companies by sales.

Earlier, in March last year, the Financial Services Commission expanded the mandatory disclosure of corporate governance to listed companies with total assets of 1 trillion KRW or more and presented revised guidelines. The new guidelines require the report to specifically describe the key contents of five items related to CEO succession, not just a formal listing of information: ▲establishment of succession policy ▲operation of succession policy ▲candidate selection ▲candidate management ▲candidate training. Furthermore, compliance with the principles is recognized only when the execution status is clearly stated.

Compliance rate of CEO succession policies by category.
[Photo by Leaders Index]

Leaders Index checked whether these five items were documented and clearly stated within the Corporate Governance Reports.

As a result of the survey, 102 companies (49.8%) specified contents related to succession policy in their reports, and 96 companies (46.8%) reported that they were operating the succession policy. More than half of the 205 companies surveyed either had no documented rules on succession policy or had prepared them but did not disclose them.

Only 61 companies complied with all five succession-related items. 27 companies complied with four items, 25 companies with three items, 20 companies with two items, and 18 companies with one item. There were also 54 companies that had no clear documentation or standards for all five items.

By major groups, LG, SK, and Samsung showed high compliance rates.

In the case of LG Group, eight companies including LG Corp., LG Electronics, LG Chem, LG Display, LG Innotek, LG Energy Solution, and LG Household & Health Care submitted reports. Four companies complied with all five key succession principles, while the remaining four companies indicated four items, averaging 4.5 items complied with.

Within SK Group, eight affiliates including SK, SK Hynix, SK Innovation, SK Telecom, SKC, SK Networks, SK Chemicals, and SK Gas submitted reports. Among them, five companies complied with all five items, and three companies complied with three items, averaging 4.25 items specified.

Samsung Group had 11 affiliates submitting Corporate Governance Reports, including Samsung Electronics, Samsung C&T, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung Heavy Industries, Samsung Engineering, Samsung Biologics, Hotel Shilla, Cheil Worldwide, and S-1 Corporation. Among these, five companies complied with all five items. Four companies complied with four items, one company complied with three items, and one company complied with two items, recording an average of 4.2 items.

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