No. of female outside board members at large companies grows, but few CEOs

There are more female members in corporate boardrooms in South Korea this year, as a revised law obliging big companies to improve gender diversity is due to take effect in August. But the presence of women executives yielding actual management power is still far from the global average, a survey and data showed Tuesday.

Of the 104 outside directors set to start their terms in the first half of this year, 45 are female, according to data from market tracker Leaders Index. 

Out of 73 executives also to be given seats on the board, only two are women. Outside directors serve as advisers without having the rights to intervene in the management. 

The increase in female representation comes as the companies with assets of more than 2 trillion won ($1.62 billion) are bound to have at least one female company board director to prevent an all-male boardroom. The revised Capital Markets Act will be enforced in August, pushing the companies to fill board seats with more female members within the first half.

Despite the noticeable increase in female outside directors, companies still have very little women corporate leaders at CEO posts or executives registered as board members.

Of the country’s top 10 conglomerates and their affiliated companies, there were only two women CEOs — Posco’s MRO service operating unit Entob’s Lee Yu-kyung and Hanwha Station Development’s Kim Eun-hee. The two women, who have no family ties to the companies in a country with dozens of family-run conglomerates, started as rank-and-file staff and climbed the corporate ladder.

Other major conglomerates such as Hyundai Motor Group, SK, LG, Lotte and GS don’t have women CEOs at all. Although Samsung’s Hotel Shilla Lee Bu-jin holds president and CEO roles and Shinsegae’s Chung Yoo-kyung serves as president, both are the founders’ grandaughters who inherited the business. 

Other chaebol groups also have women leaderdership, but all of these women are part of families that own the companies. They include Daesang Vice Chairperson Lim Se-ryung, Hanjin Vice President Cho Hyun-min and Hasol Chemical Vice Chairperson Cho Yeon-joo.

Apart from the top 10 conglomerates, IT and communications firms are making progress when it comes to women CEOs.

Naver’s new CEO Choi Soo-yeon is succeeding former female CEO Han Seong-sook from March 14, according to the company. Choi is also the youngest among Naver’s women executives.

Kakao and KT have also named women CEOs, Chung Shin-a and Kim Chul-yeon, respectively. Both Chung and Kim are their company’s first female CEOs.

The nation‘s financial sector also welcomed only two women to the top bankers’ club this year. 

Shinhan Financial Group appointed Cho Kyung-seon as CEO of the group’s IT unit Shinhan DS earlier this year. 

Hana Financial Group last week also recommended Noh Yu-jung as a candidate for the group’s first woman CEO to head its affiliate Hana Fund Service.

Gender diversity has been a key agenda for corporations around the world as even in the US, where women leaders still have little presence. 

According to last year’s report by the US’ Women Business Collaborative on progress for women in leadership, only 8.2 percent of Fortune 500 CEOs were women. The Fortune 500 lists 500 of the US’ largest firms by total revenue for their respective fiscal years. The report showed that this figure did increase from 6.6 percent in 2019, but pointed that the progress is still too slow.

Experts say that improving gender diversity in boardrooms could bring about positive effects.

“Some of the research has shown that women’s tendency to avoid risk, and their strength in paying close attention to details can evoke a positive impact in terms of accounting transparencies and enhancing company value through the voice of diversity,“ said Hong Ji-yeon, senior researcher at Korea Capital Market Institute.

”In particular, board directors require multifaceted points of view and knowledge, which is a critical requirement for conducting supervision of and managing CEOs,” Hong added.

By Kim Da-sol (ddd@heraldcorp.com)