SK Hynix Inc.’s board of directors is actively involved in the South Korean chipmaker’s management from the stages of strategy formulation to making final decisions on key investments and acquisitions, its board chair said.
For example, the world’s No. 2 chipmaker’s interest in forming a consortium to buy Arm Ltd., a British semiconductor design company, had been already discussed at its board meeting, before SK Hynix CEO Park Jung-ho shared it with reporters on the sidelines of an annual meeting in March.
“We had already discussed in depth concerns about the semiconductor supply issues and how to deal with them at board meetings,” board chair Ha Yung-Ku told The Korea Economic Daily on Sunday.
This episode is one of the numerous examples demonstrating that responsible management centering on the board of directors is taking root at Hynix.
“The company shares most of the management process, including strategy formulation and its implementation details with outside board members,” Ha noted in an interview.
“As ESG (environmental, social and governance) are becoming a key issue, the board of directors is playing a more important role than ever before.”
The former Citibank Korea CEO was appointed as SK Hynix's nonexecutive director in 2019. Ha has been chairing its board since 2021.
As a board member, the career banker had been involved in the final decision on SK Hynix’s investment in building a massive semiconductor cluster in Yongin near Seoul in 2019 and on increasing capacity at the company’s M16 DRAM chip plant in Icheon, Gyeonggi Province, in 2021.
BOARD'S INDEPENDENCE
To brag about its board’s independence, Ha cited its unanimous rejection of the company’s plan to make a donation to a foundation in June of last year and to sell a parcel of land within the semiconductor cluster in Yongin to suppliers in November the same year.
He did not elaborate on the two cases, but they marked the first time in SK Hynix’s history that all of its board members voted against a certain agenda.
“That means an atmosphere has been created where the board no longer feels embarrassed about voting against even a key project,” he stressed.
The nine board members also have seats on the company’s human resources and remuneration committee where they review CEO’s performance and compensation package.
Another factor that supports its board’s independence is that SK Hynix's management has no say over picking nonexecutive directors. Only outside directors are entitled to select them.
“By resolving corporate governance problems, a main factor behind the Korea Discount, we are trying hard to turn it into a Korea Premium.”
As part of such an effort, Hynix will also diversify its board with more female members.
Moreover, South Korean companies must report their efforts to comply with ESG standards from 2025, which force investors to take into consideration non-financial factors as well.
Ha said that being a board member of SK Hynix is the most demanding job, compared with other South Korean companies’ boards.
Preparing a three-to-four-hour regular meeting once a month requires studying the agendas and related materials, which tends to take two to three days.
Last month, Ha was named chairman of Blackstone Group’s South Korean operations after the US investment giant reopened its Korean office after eight years.
The 68-year-old career banker had led Citibank Korea for nearly 14 years between 2001 and 2014.