Samsung is adopting a “Senior Outside Director” system for two more of its branches, SDI and SDS. The decision, spearheaded by Lee Jae-yong, was reportedly made on October 26, as the company inaugurated Lee's first anniversary as a Chairman.
Samsung Electronics' Board of Directors comprises five Executive Directors and six Independent Directors — also known as Outside Directors. Now, Samsung SDI and Samsung SDS are adopting a similar strategy wherein Independent Directors can represent the board (via Business Korea).
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Generally speaking, Outside Directors “are thought to be more objective and bring a different perspective to the management of a firm” (via Investopedia). An Outside Director system can help maintain objectivity and accountability.
Samsung's Lee Jae-yong is open to external advice
Samsung hopes the new board structure will ensure appropriate checks and balances, referring to procedures that diminish mistakes and the risk of power centralization.
Checks and balances help avoid situations wherein one CEO or majority shareholder has absolute control over company-wide decisions (via Investopedia).
The change in strategy for Samsung SDI and SDS reflects Lee Jae-yong's commitment to “listening openly to external criticism and advice.”
Samsung SDI is the Korean tech giant's branch responsible for creating innovative renewable energy and energy storage systems, i.e., batteries. Samsung SDS provides consulting and SI (System Integrator) services.
