The board directors of LG H&H is comprised of three internal directors and four external directors. Their independence from the largest shareholder and management is secured. When a shareholder suggests the selection of directors based on relevant regulations, the BOD can present the bill at the general shareholders’ meetings as long as it is legitimate.
However, when a director nominee has a special relationship with key shareholders, his/her qualification to be selected is limited. The outside directors play a critical role in the decision-making process for management such as providing valued opinions on basic policies on the company’s expertise in the economic, environmental and social areas. In addition, they monitor and check the company’s performance to enhance corporate value and improve stakeholders’ right.
Compensation for external and executive directors comprises an annual basic salary and incentives. The annual salary is determined within the maximum compensation for directors as approved by the shareholders’ meeting, while incentives depend on the company’s business performance. The BOD holds regular meetings according to the pre-set annual operations plan, and convenes temporary meetings whenever other key management issues urgently need to be discussed.
To prevent conflict of interests during the BOD’s resolutions, the voting rights of stakeholders with interests in certain motions are limited in accordance to Commercial Law and the company’s own BOD regulations. On the other hand, to ensure that the BOD fulfills its role as the de facto highest decision-making body of the company, an employee within the legal team is designated to support directors. The employee is responsible for providing materials and explanations to outside directors.
By providing sufficient time before general meetings, he/she should help the directors to carefully analyze and review bills for discussion based on sufficient information. In 2010, the BOD held a total of 10 meetings, 93% of which were attended by outside directors. The board made decisions on major bills such as approving the acquisition of HAITAI Beverage and approving the acquisition of remaining shares of THEFACESHOP. In addition, the meetings covered sustainability management issues through reports including operating performance and plans of fair trade compliance program, and operating conditions and assessment results of the internal Accounting Management System.