Corporate Governance
Governance Structure
At LG Electronics, the Board of Directors plays a crucial role in the decision-making process. The Audit Committee consists entirely of outside directors to guarantee transparency and independence from management. In addition, LG Electronics has established an advanced holding company system, where professional managers are able to focus exclusively on business. Decisions specific to a company/region are made and implemented by each president (of the respective company/region), while issues concerning LG Electronics’ headquarters are dealt with by the CEO on the advice of the CXO. Important issues affecting the entire corporation are dealt with at the Senior Executive Management Council, where top management (presidents of companies and regions, CXO) gather to make significant decisions.
Primary Roles of the Governance Entities
- General Shareholders’ Meeting At the Annual General Shareholders’ Meeting, held after the end of each fiscal year and attended by top management, LG Electronics not only reports on the company’s business performance and provides information on issues requiring a decision from its shareholders, but also listens carefully to every shareholder’s opinion.
- Board of Directors The Board of Directors at LG Electronics is independent from the corporation’s main shareholders. Management also has four outside directors, accounting for more than half of all directors at LG Electronics. To guarantee fairness and independence in the selection process, outside directors are chosen at a general shareholders’ meeting after a thorough screening process by the Outside Director candidate recommendation committee .
The main role of the outside directors is to serve as a check and balance as well as to monitor the company’s overall management activities. They present an impartial view and assessment of issues, including major business issues and management operations. LG Electronics also provide its outside directors tour around workplaces in Korea and abroad firsthand, giving them the opportunity to actively participate in management while offering them training sessions hosted by the Korea Association of Directors at the same time. In 2008, seven shareholders’ meetings were held to deliberate 25 cases, including the acquisition of a solar cell investment permit, with a 78.6 percent average attendance rate for outside directors. Furthermore, outside directors and executive directors are paid in compliance with related regulations that fall within the remuneration limit for directors an amount that must first be approved at a general shareholders’ meeting.
- Audit Committee The audit committee maintains its independence by requiring all three of its members to be outside directors. Following separate regulations from those governing the Board of Directors, the committee’s main role is to carry out accounting and audit practices.
- Management Meeting The top management at LG Electronics consists of Vice Chairman and CEO Yong Nam, five presidents who are in charge of five companies, and seven heads of each business function. Some of our top management was recruited from global corporations with excellent performance records and as part of a team they all have now committed themselves to increasing LG Electronics’ global competitiveness while also helping to establish a working process that meets the global standards.
- Labor-Management Council At LG Electronics, management and labor hold a Labor-Management Council every quarter. The Labor-Management Council is operated companywide, discussing labor-management issues, including working conditions, at every business site. In addition, LGE pursues smooth communication through various channels like division meetings and forums.
