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In the Past, SK Corporation’s Audit Committee Was Comprised of Experts from Government, Policy, and Academia. Recently, the Trend Has Shifted Toward Specialists in Global Capital Markets, M&A, and Investment Transactions.
The shift reflects the growing uncertainty in domestic and global economic environments, with global experience becoming an essential capability.
SK Corporation (SK㈜) is known for emphasizing the role of its board of directors among major corporate groups, respecting their independence and autonomy. The Audit Committee also has institutional mechanisms in place to ensure its independence. However, there is a lack of formalized regulations regarding the composition of support staff under the Audit Committee.
Audit Committee with Capital Market Expertise and Impending Chairperson Change
As of last year, SK Corporation’s Audit Committee consisted of three independent directors: Kim Byung-ho, Park Hyun-joo, and Yoon Chi-won. All members of the Audit Committee are independent directors, enhancing its independence. Their responsibilities include oversight of management as well as financial and accounting operations.
Previously, the Audit Committee was primarily composed of experts in government, policy, and academia. For example, the 2016 committee included figures like Lee Yong-hee, a former visiting professor at Seoul National University’s College of Engineering, Ha Keum-yeol, a former Presidential Chief of Staff and SBS President, and Joo Soon-sik, a former standing commissioner of the Korea Fair Trade Commission.
Recently, however, the trend has shifted toward appointing experts with global experience, particularly in M&A and capital markets. Current Audit Committee Chair Kim Byung-ho holds a U.S. CPA license and has more than five years of experience in accounting and finance at financial institutions.
Committee member Yoon Chi-won is an international finance expert with a background in senior management at multinational investment firms. With his experience as CEO of UBS Asia Pacific, he has a deep understanding of capital markets and extensive expertise in investment and the financial industry. Additionally, his tenure as an independent director and Audit Committee member at Hyundai Motor Company has given him insights into corporate governance.
Committee member Park Hyun-joo is a female U.S. attorney with over 30 years of experience in international finance, M&A, and investment transactions. She has been recognized as a suitable choice for strengthening the board’s diversity and expertise in investment, legal, and international affairs.
The shift toward global expertise within SK Corporation’s Audit Committee reflects the growing uncertainty in the global economy. As an investment-oriented holding company, SK Corporation oversees subsidiaries engaged in various global businesses, including semiconductors, batteries, and chemicals. As a result, the company appears to prefer individuals with expertise in investment strategies, geopolitical dynamics, and regional risks.
With the expiration of Chair Kim’s term this year, changes are anticipated in the Audit Committee. Due to the six-year term limit for independent directors, introduced in 2020, Kim cannot seek reappointment. A new independent director is expected to be elected at the shareholders’ meeting, likely a specialist in finance or accounting to maintain the committee’s expertise.
SK Audit Committee Background / Source: SK Governance Report
Insufficient Detailed Regulations and Organizational Composition
SK Corporation’s board comprises four committees: the Audit Committee, the Personnel Committee, the Governance Committee, and the ESG Committee. While the board meets general requirements, there are deficiencies in specific regulations and sub-organization structures.
The Audit Committee has a supporting body called the “Autonomous Management Responsibility Team,” which focuses on internal audit tasks. This team, consisting of six members, including an executive-level leader, reports to the Audit Committee on internal audits, organizational composition, operating budgets, and other related tasks at least once a year.
However, there are insufficient formal regulations regarding the organization. According to SK Corporation’s governance report, “To ensure the independence of the internal audit support organization, the appointment or dismissal of the team leader requires prior consultation with the Audit Committee, as stipulated in the committee regulations.” However, regulations regarding the composition of the organization’s members remain underdeveloped.
This is also tied to the independence of the internal audit support organization. SK Corporation stated in its report, “We plan to review additional measures to secure the independence of the internal audit organization and its support structures.”
Similarly, the company lacks policies to prevent the appointment of executives responsible for actions that harm corporate value or infringe on shareholder rights. SK Corporation acknowledged that “Although internal verification procedures are in place to prevent the appointment of such individuals, detailed formalized regulations are somewhat lacking.”
• Kim Soo-min, Reporter (k8silverxyz@bloter.net)