Improved Corporate Governance

SK Chairman Chey calls it key factor for success in biz management

SK Group Chairman Chey Tae-won, in his speech at the Korea Society in New York on February 28 said the corporate governance in Korea has a lot of room for improvement in order for Korean business firms to survive global competition and move forward.
He said the role of a corporation has essentially been confined to making contribution to the nation's economic growth. But, he said, time has changed and all players including shareholders, employees, local communities and the government should all pitch in to improve corporate governance.
Chairman Chey said he realized as the CEO that top-down management system in which one man at the top decides all the important matters for the company is no longer viable these days and outdated and decided to change the decision-making mechanism of the SK Group. He became chairman of the group, the fourth largest in the country, in 1998.
Chey said the conglomerate has changed its decision-making process by making the board of directors taking a bigger role with its members including outside directors for the first time.
The chairman said the change was what the group needed to enable it to survive from the tough competition at home and abroad.
Currently, about 70 percent of the group's board members is made of outside directors and the shake-up in the board's composition and increased responsibility played a key role in SK's success in defending itself in 2004 from the bruising take-over attempt by Sovereign Asset Management, a hedge fund based in Monaco. The hedge fund charged an accounting fraud and dubious deals by Chey and his executives, but later the fund withdrew the charge.
On the SK Group's operation in China, he said Korea is sandwiched between China and Japan, adding that China is trying to catch up with Korea, while Japan keeps running ahead of Korea. He said SK will beef up its operations in China to benefit from China's explosive economic growth.
The chairman, in his new year speech, said the SK group needs to secure global capabilities in every respect like organization, institutions, office procedures, skill, culture and manpower training-to boost its global standing.
"Global strategies should have tangible accomplishments. Most subsidiaries have already embarked their strategies in that direction and all should follow suit soon or later,"the chairman said.
He said all of us agree that growth is essential for making people happy and it depends on the progress of globalization. The chairman said the group is faced with a stark reality in which the barriers standing in the way in its global challenges grow higher, and it has to set up detailed plans to compete in world markets and use them as the group makes inroads into world markets.
Chey also called for an advancement of system management to ensure autonomous and responsible management, adding that "evolution cannot be made according to the changes of the environment without autonomy and responsibility."SK's corporate culture is about execution and development of SKMS ideas, he said.
The chairman urged his staff to make efforts to disseminate the group's corporate culture designed to pursue happiness. He said "we have established a pursuit of happiness SK Group's management philosophy and corporate culture." "When we began to talk about happiness, we sometimes mistake that sharing happiness meant doling out something to others, but we have now reached a stage where we need to share happiness for ourselves, not with others,"he said.
SK Group plans to concentrate on the spread of sharing happiness as well as co-prosperity management among business partners, he said.
The chairman said the group has laid a solid operating condition for its global presence for a substantial growth in the world market. The group's total annual sales broke the 70 trillion won mark last year for the first time in its history, he added.
SK Corp. in particular has made a strong progress in its oil exploration to go a step up to be counted on as a oil major in the Asia-Pacific region. It has acquired Incheon Oil Refinery and stepped up its natural gas exploration in Peru.
SK Telecom, on the other hand, advanced into the U.S. telecommunication market and forged an alliance with China Unicom. SK Network continued to surpass its management targets following a workout and posted a record high for business performance last year. nw

SK Group Chairman Chey Tae-won speaking at Korea Society in New York as an invited speaker Feb. 8.