Guidelines on the Diversity of the Board of Directors
Hyundai Motor Company (“HMC” or the “Company”) endeavors to compose its Board of Directors (the “BoD”) with directors from various backgrounds so that the BoD can make important decisions from a broader point of view by widely considering the interests of various stakeholders, including shareholders and customers.
• Diversity
- Nationality: HMC selects director candidates with various nationalities to establish an advanced global governance structure.
- Age: HMC enhances the BoD’s efficiency by harmonizing experienced leadership with flexibility in response to the changing business environment.
- Gender: HMC applies the principle of gender equality in opportunities to operate the BoD from various perspectives.
- Experiences and backgrounds: HMC ensures that its directors are not concentrated in certain backgrounds, while also considering the particular characteristics of Korean society.
- Race and Ethnicity: Efforts to gain creative thinking from diverse races and ethnic communities
- Religion: Respect for the diversity of religion, avoiding bias from certain religions
- Other: Comprehensive consideration of other factors related to diversity
• Recommendation channels
- To promote various stakeholders’ interests, HMC utilizes various and independent channels of recommending directors, including the shareholder recommendation system.
In deciding the composition of the BoD, the BoD confirms whether the composition of its directors fully satisfies the foregoing diversity requirements through a “diversity verification” process.
HMC will continuously endeavor to operate its BoD in a more efficient manner with the input of various perspectives and experiences.
Guidelines on the Independence of Independent Directors
HMC composes the majority of its directors with outside directors.
The appointment of all directors is presented to the general shareholder's meeting as an individual agenda item.
In addition, non-executive directors are prohibited from serving as directors, executive officers, and/or auditors of two or more other companies other than the company itself. This allows them to faithfully perform their duties as non-executive directors.
To verify the independence of HMC’s outside directors, HMC not only complies with applicable laws and regulations, but also applies global guidelines and establishes more stringent independence requirements. Based on such requirements, the BoD and Recommendation Committee on Candidates for Outside Directors verify the independence of HMC’s outside director candidates and re-appointed outside directors.
Outside directors are considered independent when they satisfy the following requirements:
① The outside director has not served as the Company’s executive over the last five years;
② The outside director’s lineal ascendant/descendant has not served as an executive of the Company or any of its subsidiaries over the last three years;
③ The outside director is not an executive or employee of a business entity (i) whose aggregate transaction amount with the Company during the last three fiscal years is or exceeds 10% of the Company’s total assets or sales, or (ii) which executed a transaction agreement with the Company in the amount equivalent to or exceeding 10% of the Company’s total sales on a single contract basis during the latest fiscal year;
④ The outside director is not in a personal business relationship with the Company or the Company’s management;
⑤ The outside director is not employed by and has no business relationship with another outside director of the Company; and
⑥ The outside director has no other interest in the matters decided by the BoD.
In addition to the foregoing requirements, when determining the independence of the Company’s outside directors, the BoD will comprehensively consider what kinds of other material relationships the outside directors have with the Company, including situations in Korea/abroad and overall circumstances surrounding the outside directors and the Company.