The non-executive director system, which was adopted in 1998 in order to restrain the despotism of major shareholders and secure management transparency, has become a charity for yes-men.
According to a survey of non-executive directors from large companies conducted by CEO Score, 99.7 percent of the non-executive directors responded that they casted a vote for the agendas at board meetings last year. These results show that they are simply acting as rubber stamps to help the management, which is completely at odds with the spirit of the system.
According to CEO Score on March 10, a total of 692 non-executive directors exercised a total of 13,284 votes on 3,774 items. The company surveyed the activities of non-executive directors from 167 companies of 37 among 49 business groups or conglomerates that are subject to prohibition from cross-board investments. Among the votes cast, 13,243 votes, 99.7 percent of them, were yes votes.
There were 41 votes that were not yes. Among them, 13 were dissenting votes, or 1 in 1,000. The remaining 28 votes were neither yes nor no, including reservation or other respos.
Among the 37 business groups surveyed, 25 of them, which accounts for 68 percent, showed a 100 percent agreement rate. The non-executive directors from other than top 10 groups had the higher agreement rate.
Only 4 companies from the top 10, including Lotte, POSCO, Hyundai Heavy Industries, and Hanjin, showed a 100 percent agreement rate. Unfortunately, 70 percent of companies other than the top 10 showed a total agreement rate.
The 43 non-executive directors from Lotte exercised 1,130 votes on 278 items, and their agreement rate was 100 percent. The 24 executive directors from POSCO and and 4 non-executive directors of Hyundai Heavy Industries also cast 466 yes votes in total and zero no's (423 for POSCO and 43 for HHI). The 74 non-executive directors from Samsung exercised 1,536 votes with a 99.9 percent agreement rate.
Meanwhile, the average annual salary of non-executive directors stood at 49 million won (US$43,594.31). They received 4.5 million won (US$4003.56) on average every time they attended a board meeting.
The Samsung Group had the highest annual salary for its executives, which was 75 million won (US$66,725.98), followed by the KCC with 70 million won (US$62,277.58), S-Oil with 69 million won (US$61,387.90), Hyundai Motor with 68 million won (US$60,498.22), and Amore Pacific with 63 million won (US$56,049.82).