Seoul, South Korea – A recent study by the Leaders Index has revealed a significant surge in the number of former government officials serving as external directors on the boards of South Korea’s top 30 conglomerates. This trend has led to a growing concentration of expertise in legal and policy matters within these corporate governance bodies.

The analysis, which covered 237 subsidiaries of the 30 largest conglomerates, found that former government officials accounted for 27.3% of the 856 external directors in 2023, a substantial increase from the previous year's figure of 24.3%. Among these former officials, those from the prosecution service constituted the largest group, making up 21% of the total. Former officials from the National Tax Service (17.9%), judiciary (12.7%), Ministry of Economy and Finance (7%), and Fair Trade Commission (3.9%) also held significant positions.

As a result of this trend, the skill sets of corporate boards are increasingly focused on specific areas. Of the eight skill categories analyzed, legal and policy expertise was the most prevalent, accounting for 29.8% of external directors. In contrast, areas such as finance and accounting (17.5%), technology (14.1%), investment (13.1%), business (12.3%), and environment and ESG (4.4%) had relatively lower representation.

While the number of female external directors has increased, reaching 20.2% of the total, they also exhibited a similar concentration in the legal and policy domain. Of the 173 female external directors, 30.6% possessed expertise in these areas.

Among the conglomerates, Shinsegae exhibited the highest proportion of former government officials as external directors, with 73.9% of its board members hailing from this background. Samsung also significantly increased its representation of former officials, appointing 13 out of 19 new external directors from the government sector, raising the overall proportion to 46%.

These findings underscore a growing reliance on individuals with government experience in shaping corporate governance in South Korea. While such expertise can be valuable, concerns have been raised about potential conflicts of interest and a narrowing of perspectives within corporate boards.

[Copyright (c) Global Economic Times. All Rights Reserved.]