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15 Years Since the Introduction of Outside Directors…Is it more of “Bringing them as insurance protection?"

 


Chosun.com | June 18, 2013


Donga Daily has reported on the 18th that the outside director system, which was introduced in 1988 in order to enhance industry’s transparency and professionalism, has not found its right place after some 15 years.

Based on analysis conducted by Donga Daily with the assistance of global headhunter company Russell Reynolds of major domestic and foreign companies’ outside director status, it was discovered that domestic companies mostly brought in scientists who were former government officials as outside directors whereas foreign companies brought in IT professionals. The newspaper reported that such practice is being interpreted as “insurance” against potential tax audits or criminal investigations etc.

According to Donga Daily, Wal-Mart, the world’s largest retailer, has 11 directors from the industry among its 13 outside directors and 5 directors are IT professionals. The energy company ExxonMobil has brought in IT, food and insurance sector professionals such as IBM’s former Chairman, Samuel Palmisano. Apple also has variety of professionals participating in management as outside directors such as Walt Disney’s Chairman, Robert Iger, and others.

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15 Years Since the Introduction of Outside Directors…Is it more of “Bringing them as insurance protection?"