The share of bureaucrats serving as outside directors in South Korea’s top 30 conglomerates has increased, resulting in a concentration of board expertise in legal and policy domains. (Image courtesy of Pixabay/CCL)
SEOUL, Jan. 9 (Korea Bizwire) — The proportion of bureaucrats serving as outside directors in South Korea’s top 30 conglomerates has grown, concentrating board expertise in legal and policy fields, according to a report by corporate analysis firm Leaders Index on January 9.
Key Findings
An analysis of 856 outside directors across 237 companies within the nation’s leading conglomerates revealed that bureaucrat representation increased from 201 members (24.3%) in 2023 to 229 members (27.3%) in 2024, marking the largest growth among professional backgrounds.
- Bureaucratic Backgrounds: Prosecutors accounted for the largest subgroup at 48 (21%), followed by National Tax Service officials (41, 17.9%), judiciary professionals (29, 12.7%), and officials from the Ministry of Economy and Finance (16, 7%).
- Expertise Concentration: Directors with expertise in legal and policy matters made up 29.8% of the total, far surpassing those in finance and accounting (17.5%), technology (14.1%), and environment/ESG (4.4%).
Gender Representation and Trends
Women comprised 20.2% of outside directors for the first time, totaling 173 members. However, most specialized in legal and policy fields (30.6%).
Among conglomerates, Shinsegae had the highest proportion of bureaucratic directors at 73.9%, with 17 of its 23 outside directors from government backgrounds. Samsung showed the largest increase, appointing 13 bureaucrats out of 19 new directors, raising its share from 30.5% to 46%.
Calls for Board Diversity
Leaders Index highlighted the growing adoption of Board Skills Matrices (BSM) by major companies in advanced economies to enhance board diversity. “For boards to effectively oversee corporations, diversity in expertise, skills, and experience is essential,” the report emphasized.
The findings underscore a need for South Korean companies to broaden their board compositions to address complex challenges beyond legal and policy matters.
M. H. Lee (mhlee@koreabizwire.com)
