Corporate Governance

Since the creation of LG Group’s holding company structure in 2003, LG Electronics has operated with an advanced corporate governance structure, centered on the Board of Directors. The BOD is committed to upholding the highest standards of management transparency, and to increasing corporate and shareholder value.

Shareholders
As of December 31, 2009, LGE’s total outstanding common stock totaled 144,647,814 shares, and preferred stock 17,185,992 shares. The number of non-voting shares amounted to 17,949,149, or 11.1% of the total outstanding. LG Corporation, the Group’s holding company, owned 31.1% of the shares. At the most recent Annual General Metting (AGM), the CEO personally updated shareholders on current management issues. Shareholders’ opinions and suggestions were gathered, carefully considered by management and the BOD, and reflected in corporate policy.

Board of Directors
The BOD consists of 7 Directors, 4 of whom are Outside Directors. The BOD operates independently of any influence from major shareholders and the management. The Outside Directors are appointed by the AGM following review by the Outside Directors Recommendation Committee, to ensure fairness and transparency in the nomination of candidates. The Outside Directors are recognized professionals who monitor the corporate’s overall management activities and provide substantial advice to the management. The BOD’s main role is to provide strategic guidance on important issues and evaluate the effectiveness of the corporate’s management. In 2009, the BOD met 9 times to review 29 agenda items (20 approved, 9 reported), including the management’s mid- and long-term business strategy. The attendance rate by the Outside Directors was 95%.

Committees
The BOD is supported by three Board Committees. They are the Audit Committee, the Outside Directors Recommendation Committee and the Management Committee. The first consists of three Outside Directors, and is responsible for examining the corporate’s financial records and accounting systems to ensure their legitimacy. The Management Committee reviews and determines ordinary management matters, as entrusted by the BOD. It reviewed a total of 42 agenda items in 2009.

Evaluation and Compensation
Compensation amounts for the Outside Directors and Inside Directors are set in accordance with relevant regulations, and within limits prescribed by the AGM. Directors’ performance is evaluated annually, and compensation amounts are determined by qualitatively and quantitatively considering the evaluation results, achievement of targets, and professional dedication.

Governance Structure

At LG Electronics, the Board of Directors plays a crucial role in the decision-making process. The Audit Committee consists entirely of outside directors to guarantee transparency and independence from management. In addition, LG Electronics has established an advanced holding company system, where professional managers are able to focus exclusively on business. Decisions specific to a company/region are made and implemented by each president (of the respective company/region), while issues concerning LG Electronics’ headquarters are dealt with by the CEO on the advice of the CXO. Important issues affecting the entire corporation are dealt with at the Senior Executive Management Council, where top management (presidents of companies and regions, CXO) gather to make significant decisions.