SK Group to recruit more outside directors

South Korea's fourth-biggest conglomerate, SK Group, said on Saturday it would increase the number of outside directors in its units to improve corporate governance, after a bid to remove the head of its main company. The move comes two weeks after Chey Tae-won, chief executive and chairman of SK Corp, the de facto holding company of the family-run group, won shareholder backing to stay on in the face of a bid by an activist fund to oust him.
Outside directors now make up more than half the SK Corp board in the wake of the push by Sovereign Asset Management Ltd, the company's second-largest shareholder, to oust Chey, who has been convicted of fraud at one group company.
"SK's improvement in corporate governance and transparent management systems is a key change in our corporate structure," Chey said in a statement.
The SK Group's major units, including mobile phone operator SK Telecom Co and oil trader SK Networks Co Ltd, agreed at shareholder meetings this month to have a majority of outside directors on their boards.
"Our final goal in doing this is to ensure we have transparent and ethical management that goes beyond market requirements," SK Group said in a statement after a two-day meeting of 20 group executives, including Chey.
Unlisted companies in the group would have at least one outside board member, a first for a Korean business group, it said.
SK Group has accelerated efforts to enhance management ethics since Sovereign Asset Management, which holds nearly 15 percent of SK Corp campaigned to unseat Chey, who had been convicted of fraud at SK Networks and is still battling to avoid a jail sentence.
The Dubai-based fund argued that unethical executives should be booted out of the boardroom.
The battle between SK and Sovereign pits minority and foreign shareholders against South Korea's family-run conglomerates, or "chaebol", which dominate Asia's third-biggest economy.
Foreign investors, who hold more than half of SK's stock, say lax corporate ethics are a key reason why South Korean shares are worth less relative to other Asian markets, a factor known as the Korea Discount.