Outside Director Lineup
Aekyung Industrial, Acquired by Taekwang Group, Makes a Fresh Start with Tax, Accounting, and Marketing Professors

[비즈한국] The composition of corporate boards is changing. There is a clear trend of appointing practical experts to outside director positions that were previously criticized as merely being 'rubber stamps' for major shareholders. This changed lineup of outside directors has become a clear indicator of a company's future direction and the crises it faces. Bizhankook examines the changes in the outside director lineups of major companies and analyzes their future blueprints and underlying intentions.

Overhauling the Outside Director Roster with Professors Promoting 'Transparency'

Aekyung Industrial has completely replaced its outside director lineup following its incorporation as a subsidiary of the Taekwang Group. On March 26, Aekyung Industrial held its 41st regular general shareholders' meeting at Aekyung Tower in Mapo-gu, Seoul, to handle key agenda items such as the approval of financial statements, and it made changes to the board composition by appointing new outside directors.

Three new outside directors have been appointed: Kim Woo-cheol, a professor of taxation at the University of Seoul; Song Chang-joon, a professor at Hanyang University Business School; and Yoon Yeo-sun, Dean of the KAIST College of Business. Former outside directors Jin In-sik and Namgoong Jin resigned mid-term for personal reasons despite having time remaining on their terms, while Park Hyung-myung stepped down upon the expiration of his term.

The newly appointed Kim Woo-cheol is considered an expert in the fields of taxation and fiscal policy. He served as the Tax Analysis Director and Tax Revenue Estimation Team Leader at the National Assembly Budget Office. He is currently a professor of taxation at the University of Seoul and also serves as an outside director for the Korea Deposit Insurance Corporation.

Song Chang-joon is a professor in the School of Accounting at Hanyang University Business School and holds a Ph.D. in Accounting from Michigan State University. He has taught as a professor at Virginia Tech and Sungkyunkwan University, and currently serves as an outside director for the bio company Progen.

Yoon Yeo-sun is the Dean of the KAIST College of Business and a marketing professor. She received her Ph.D. from the University of Michigan. She serves as an outside director for Hyosung Heavy Industries298040 and SeAH Besteel Holdings001430, and is recognized as an expert in brand strategy and consumer analysis.

It is worth noting that the newly formed board is entirely composed of academics. Traditionally, boards have been centered on industry practitioners to reflect various interests, but this has led to criticism regarding the limits of their independence and objectivity in decision-making. Analysts suggest that placing academic figures, who are relatively free from external influence, at the forefront is intended to emphasize transparency in board operations.

This change is also interpreted as a measure conscious of potential controversy following the acquisition by Taekwang Group. Taekwang Group has continuously faced controversies related to its corporate governance. Some in the industry view this board restructuring as a strategic move to strengthen management oversight while preemptively managing future controversies.

Product Recall Crisis and Task of Restoring Brand Trust: Recruiting Marketing Experts

Aekyung Industrial was officially incorporated as a Taekwang Group subsidiary on March 26. In March last year, Aekyung Group decided to sell Aekyung Industrial for the purpose of improving its financial structure. The Taekwang Industrial consortium emerged as a strong candidate for acquisition, and in October last year, AK Holdings006840 announced that it had signed a contract to sell its 63.13% stake in Aekyung Industrial to the Taekwang Industrial consortium.

However, variables arose during the transaction process. A banned substance was detected in Aekyung Industrial's '2080 Toothpaste' produced in China, leading to a full product recall. It is reported that Taekwang Industrial reviewed the impact on future performance due to concerns over declining brand trust. Eventually, both sides renegotiated the terms of the deal, and the sale price was adjusted from approximately 470 billion won to 447.5 billion won.

Following its incorporation into the Taekwang Group, the nature of Aekyung Industrial's board has changed significantly. Aekyung Industrial had previously appointed certified public accountants, financial experts from the Korea Development Bank, and former judge-lawyers as outside directors, focusing its board operations on internal control and legal risk management. However, analysts note that by replacing all existing outside directors this year and reorganizing around a faculty of tax, accounting, and marketing experts, the board has shifted toward strategic support.

A notable feature of this new board composition is the inclusion of a marketing expert. The participation of an outside director in charge of brand and consumer strategy on Aekyung Industrial's board is unusual. Aekyung Industrial's corporate image was hit hard recently by the toothpaste ingredient issue, making the restoration of market trust a primary task. Accordingly, it appears that a marketing expert was included on the board to strengthen brand competitiveness.

Along with the board restructuring, Aekyung Industrial is also making changes to its management and overall organization. Vice Chairman Chae Dong-seok, a member of the Aekyung Group owner family, stepped down from his position as CEO, and the company transitioned to a sole CEO system under Kim Sang-jun, who previously shared duties with Vice Chairman Chae. Jung In-chul, Vice President of Future Business at Taekwang Industrial, has joined the board as a non-executive director.

While the existing name will be maintained in consideration of brand continuity and market reliability, the company plans to extensively revamp its organizational structure. The existing business divisions centered on cosmetics and household goods have been subdivided into makeup, skincare, personal beauty, home care, and dental care. The company plans to establish a specialized marketing organization and expand infrastructure investment in R&D, production, and logistics.

Kim Sang-jun, CEO of Aekyung Industrial, stated, "The fresh start as a Taekwang Group subsidiary will be a significant opportunity for qualitative change," adding, "We will continue to take on challenges and innovate to leap forward as a total beauty company representing K-beauty."