"SK hynix's 1,100 Trillion Won Investment Should Be Decided by the Board, Not Chairman Chey"

Korea Corporate Governance Forum Issues Commentary
"Chairman Chey Tae-won Not on the Board... Questions About Qualifications"

Yonhap News Agency

The Korea Corporate Governance Forum pointed out that the SK hynix investment plan worth 1,100 trillion won should be decided by the board of directors of SK hynix, not by Chey Tae-won, Chairman of SK Group.

Namwoo Lee, President of the Governance Forum, made this criticism in a commentary on the 9th. President Lee stated, "On June 20, Chairman Chey unusually announced SK hynix's large-scale mid- to long-term investment plan himself. Chairman Chey is recognized as the largest shareholder under the Fair Trade Act, and is both Chairman and registered director of SK Inc., the top holding company that could have conflicts of interest with SK hynix. However, at SK hynix, he is only a non-registered chairman and not an internal director," adding, "He owns no shares in SK hynix and is not a member of the board, so his announcement of a large-scale investment plan before board approval violates the OECD Principles of Corporate Governance."

This means that, as a matter of principle, it is appropriate for the board of directors of each company undertaking such business to make independent judgments. Previously, Heungkuk Asset Management raised the same issue in a shareholder letter sent to the SK hynix board. Heungkuk Asset Management pointed out that it is inconsistent with the international standard of 'board-centric management' for the 'controlling shareholder of the controlling shareholder,' who is not even a board member, to announce a large-scale investment plan publicly together with the government.

President Lee emphasized, "Ko Seungbeom, the former Chairman of the Financial Services Commission, who became Chairman of the Board in March, should immediately convene the board, receive a detailed report from management on the 1,100 trillion won 'future business and management plan,' and then decide together with independent directors whether to approve it," adding, "Capital allocation measures such as investment for the future and shareholder returns (dividends and share buybacks) are core responsibilities of the board."

He also criticized the expectation that, following the listing of SK hynix's American Depositary Receipts (ADR) on the U.S. Nasdaq on July 10, the company will naturally be valued at the same level as American semiconductor firms such as Micron Technology as being overly complacent. President Lee asserted, "Listing does not immediately lead to a higher stock valuation. Only when corporate governance is improved can stock revaluation occur," and added, "The board must be made independent from group influence and transparency must be enhanced, so that all decisions are made in accordance with the revised Commercial Act, protecting the interests of all shareholders equally."

He further stressed that the current composition of the SK hynix board must be improved, pointing out that out of six outside directors, four are professors or former public officials with no business experience. President Lee noted, "It is rare in developed countries such as the United States and Europe for a former chairman of the Financial Services Commission to chair the boards of the two leading semiconductor companies, Samsung Electronics and SK hynix," and urged outside directors to make efforts to secure their own independence.

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