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Corporate Governance

This section provides information about the management and organizational structure of LG Electronics.

Following the launch of the holding company, LG Electronics operates under an advanced corporate governance structure that comprises a professional administrator and a Board of Directors. This structure helps us deploy more transparent, value creating management activities that help increase corporate and shareholder value.

When LG Electronics removed the ‘Circulating Investment Structure’ of its affiliated companies through the launch of a holding company system, this enabled the holding company to take full charge of investments. Consequently, LG Electronics has been able to focus on its own businesses while increasing the overall value of the Company. This corporate governance structure has laid the groundwork for increasing managerial transparency. Through a responsible management system comprising the CEO of LG Electronics and a Board of Directors, we are taking huge steps in strengthening our competitiveness at domestic and international level in order to maximize corporate and shareholder value.

LG Electronics' Board of Directors maintains independence from its management and major shareholders. Currently the Board has a total of seven directors, four of whom are outside directors. To ensure that external directors are appointed fairly and independently, the "External Director Recommendation Committee," comprising one in-house director and one external director, nominates external directors following close examination of their qualifications. These outside directors are then voted on at the next shareholders' meeting.

Outside directors are always well qualified individuals with professional knowledge and experience in key areas. Their main role is to carry out check and balance functions, as well as monitor the Company's overall management activities. They also act as objective advisors to the Company. The Board meetings take place every month, and every member is required to participate in the meeting.The board members review the meeting agenda provided by the Company management prior to the board meeting, evaluate and supervise the Company management's performance and business transactions with affiliated companies, and other important management issues. Since 2005, LG Electronics has given the board members an opportunity to actively participate in the Company's management activities by offering an 'On-The-Spot Management Program' that allows the members to directly visit Company business venues based both locally and abroad. The Company also encourages participation in outside director training programs that are hosted by the Korean Directors Association.

To ensure complete independence from the company’s management and major shareholders, the Audit Committee is composed of three outside directors. The Committee's role is to examine various financial reports and enhance managerial transparency and fairness as supervisors. In addition, the committee members approve the appointment of outside auditors after careful review of the candidates' professionalism, independence, reputation, capability, ability to audit international businesses, as well as possibilities of conflict of interest associated with the Company.