SK Corp's board decided Sunday to oust three members in a reshuffle aimed at improving governance in a battle with foreign shareholders over management control at the lucrative South Korean oil refiner, officials said.
The three outgoing board members include SK Group chairman Son Kil-Seung who was jailed last month on charges of syphoning off corporate money.
Son, 62, has been at the center of corruption allegations which prompted an inquiry by prosecutors into illegal funds raised by top businesses to finance South Korea's 2002 presidential elections.
The board would field seven outside directors instead of five to improve governance, SK officials said, adding SK Group owner Chey Tae-Won would lead the 10-member board as the refiner's chief executive.
The new outside directors include former prime minister Cho Soon and former Korea Gas Corp chief Nam Dae-Woo, who were also recommended by Mocano-based Sovereign Asset Management for SK Corp's new board.
The board also proposed a committee controlled by outside directors who will oversee the company's reform.
SK Corp's managing director Yoo Jeong-Jun hoped the change would be endorsed at a shareholders meeting on March 12.
"I am confident that we can beat Sovereign in a vote," he said, adding the board's decision reflects Chey's determination to improve corporate governance.
The decision comes after a battle between Chey and foreign shareholders for management control of the key unit of South Korea's third largest conglomerate.
Sovereign, which holds a direct 14.99 percent stake in SK Corp, has been challenging management which it claims has acted more in the interests of the controlling family than ordinary shareholders.
Sovereign CEO James Fitter arrived in Seoul last week to lead his campaign against Chey. He has sent a letter to minority share-holders calling for support.
Sovereign has vowed to oust Chey from SK Corp's board holding him responsible for an accounting fraud scandal involving the group's ailing trading arm, SK Networks.
In June last year Son was sentenced to a three-year jail term suspended for four years for his role in the scandal.
Chey, 42, was also sentenced to three years in prison on charges of illicit dealings and bookkeeping aimed at tightening his control of the family-run business empire. He was freed later on bail.
The feud between Chey and Sovereign intensified after SK Corp's board under Chey's stewardship approved a debt-for-equity swap to save SK Networks from bankruptcy.
Chey and foreign shareholders have since increased their stake in SK Corp.
Sovereign has been at the center of a growing debate over the role of foreign investors in South Korean companies.
The SK scandal has led to widespread inquiries into the practice of business groups raising slush funds and their illegal funding of politicians.
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