At chaebol, outside board members are rubber stamp

Outside directors on the boards of 169 conglomerate subsidiaries play little to no role in checking decisions made at these companies, according to figures released by the Fair Trade Commission on Wednesday.

Only 17 motions, less than 1 percent, of 4,361 motions put forward for board approval at the 169 companies were rejected between April 1 last year and April 30 this year. The figure is strikingly low considering that outside board members account for 50.6 percent of boards this year, up 3.1 percent from six years earlier.

The low rate is likely to fuel criticism that outside directors are no more than rubber stamps on key decisions made by management instead of voices of dissent.

The 169 companies reviewed by the Fair Trade Commission belong to 26 conglomerates, which are subject to strict regulations on cross-shareholding among subsidiaries.

Cross-shareholding has been one mechanism through which conglomerates have maintained their economic dominance in the country - and through which owner families have solidified their control of the companies.

Of the 26 conglomerates, 21 are run by families such as the Lees of Samsung Group and Chungs of Hyundai Motor, while five are run by appointed chief executives, including Kwon Oh-joon of steelmaker Posco and Hwang Chang-gyu of telecom company KT.

The 21 family-run conglomerates have 955 subsidiaries. Of the 955, 151 are listed companies while the rest are not.

At the five non-family-run conglomerates, only 18 of their 103 subsidiaries are listed companies.

BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]