Samsung Group to enhance governance reliability with director initiative

Samsung Electronics Co. executive chairman Jay Y. Lee

Around a year ago, Samsung Electronics Co. executive chairman Jay Y. Lee expressed his commitment to building a company that earns more trust from the public.

“I believe it is my responsibility to make the company more reliable and trustworthy,” he said during his visit to the Seoul Central District Court in Seocho-dong, Seoul, on October 27, 2022, following the conclusion of his trial for alleged mergers and accounting irregularities in Samsung affiliates.

Lee recently reiterated his dedication to transparent management as he marked his one-year anniversary as chairman.

Samsung Group unveiled its plans for a senior independent director initiative on Thursday, which aligns with Lee’s commitment to emphasizing board-centered governance. When Lee assumed the role of chairman last year, he voluntarily engaged in a board review process, which was not mandatory. “There have been governance improvements internally, in line with Lee’s desire to heed criticisms and advice with an open-minded approach,” according to an unnamed source from the company.

During a board meeting held on the same day, Samsung SDI Co. and Samsung SDS Co. decided to implement the company’s senior independent director system. As a result, Dr. Kwon Oh-kyung, a distinguished professor at Hanyang University, will serve as a senior independent director at Samsung SDI, while Dr. Shin Hyun-han, a professor at Yonsei University, will take on the role of senior independent director at Samsung SDI. Both directors initially joined as independent directors in March 2020.

The senior independent director initiative aims to ensure a balanced approach by working as a watchdog in a company where the chief executive officer or an internal director heads the board of directors. The senior non-executive directors have the authority to convene non-executive meetings and can request business updates from the management. They are also responsible for acting as an intermediary for other directors as and when necessary.

Other Samsung affiliates will also mull implementing the system. The major eight affliates, including Samsung Electronics Co, Samsung Electro-Mechanics Co, Samsung Life Insurance Co, Samsung Fire & Marine Insurance Co., Samsung Securities Co, Samsung Card Co, Samsung Asset Management Co, and Samsung C&T Corp., are not eligible for this program, as they already have independent directors leading their respective boards.