LG 2004 Annual Report Download - page 53

LG ELECTRONICS ANNUAL REPORT 2004
052
053
After the launching of the holding company, LG Electronics is equipped with an advanced corporate
governance structure that is focused on a Board of Directors and a professional administrator.
This helps us deploy more transparent and value creation management activities that increase
Company value, as well as shareholder value.
The Professional Administrator's
Responsible Management System, and
the Board of Directors-focused
Independent Management System
●When LG Electronics removed the
"Circulating Investment Structure" of its
affiliated companies through the launching of a
holding company system, this let the holding
company take full charge of investments, and
LG Electronics could place its 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. By
introducing a responsible management system
under professional administrator S.S. Kim, CEO
of LG Electronics, as well as using a Board of
Directors-focused management system, we are
taking strides in strengthening business
competitiveness both domestically and
internationally. This results in maximizing
Company value, as well as shareholder value.
An Independent Board of Directors,
and Outside Directors' Activities
●The LG Electronics' Board maintains
independence from its management and
major shareholders. Currently the Board has a
total of seven directors, four of whom are
outside directors. To secure fairness and
independence in appointing outside directors,
an Outside Director Recommendation
Committee consisting of one in-house director
and one outside director, nominates outside
directors after strict screening of their
qualification. These outside directors are then
voted on at the next shareholders' meeting.
The outside directors are always
well qualified people with professional
knowledge and experience in vital areas. Their
main role is to conduct check and balance
functions, as well as monitoring the
Company's overall management activities.
They also play a role 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 screen the meeting agenda offered
by the Company management prior to the
Board meeting, and evaluates and supervises
the Company management's performance,
business transactions with affiliated
companies, and other important management
matters. In 2004, LG Electronics gave the
Board members an opportunity to more
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 home and abroad. We also
encourage them to participate in the outside
director training programs that are hosted by
the Korean Directors Association.
Enhancing the Independence and
Responsibility of the Audit Committee
●To secure complete independence
from the Company management and major
shareholders, The Audit Committee is
composed of three outside directors. The
Committee's role is to examine all kinds of
financial reports, and enhance managerial
transparency and fairness as supervisors. In
addition, the committee members approve
the appointment of outside auditors after
carefully reviewing the outside auditor
candidates' professionalism, independence,
reputation, service capability, and ability to
audit international businesses, as well as any
possible business conflicts with the
Company.
40%
Foreign Investors
36%
LG Corp.
Shareholding
Corporate Governance
LG Corp. LG Electronics
LG.Philips LCD.
LG Micron
LG Innotech
HI Plaza
Domestic Individual &
Institutional Investors
24%