SK discovery is committed to protecting the rights of shareholders and investors. We have improved the procedures and information disclosure practices of General Meetings of Shareholders to make sure stakeholders have accurate information in a timely manner. We have also improved access to information by diversifying our communications channels and establishing an internal delivery system to disclose information.
Convocation of a General Meeting of Shareholders
In accordance with Article 363 and 542-4 of the Commercial Act and Article 15 of our Articles of Incorporation, we disclose all matters concerning the General Meeting of Shareholders, including the date, place and agenda, on our Data Analysis, Retrieval and Transfer System (DART) and on the company website (www.skdiscovery.com).
To ensure as many shareholders as possible take part in management decisions, we selected an earlier notification date for meetings. By using the DART, we now notify shareholders about 21 days before the General Meeting of Shareholders and continue to set the notice as early as possible. SK discovery and our key subsidiaries hold the General Meeting of Shareholders on varying dates to facilitate the participation of ordinary shareholders.
Operation of a General Meeting of Shareholders
Shareholders attending the General Meeting of Shareholders may freely express their opinions, make inquiries and ask for explanations before the resolution of the agenda. We always respond in good faith to requests from shareholders who attend the General Meeting of Shareholders (providing requests are not intended to interfere with proceedings, have no validity or repeat other queries). Our officers and managers in charge of presenting an issue respond to questions from shareholders.
To ease the voting process and secure a meeting quorum, we introduced electronic voting at the 51st Ordinary General Meeting of Shareholders. We also implemented a “proxy solicitation” for all shareholders in order to facilitate the exercise of voting rights. In addition, shareholders can exercise voting rights indirectly by submitting written documents that verify proxy representation.
After the General Meeting of Shareholders, we transparently disclose the agenda and the number of shares and ratio of affirmative/negative votes on the Corporate Governance Report.
Protecting Shareholder Rights
We ensure that ordinary shareholders can exercise their rights at the General Meeting of Shareholders. All shareholders have the right to one vote per share. Any matter that materially affects the company and the rights of shareholders, such as mergers or business transfers, is decided at the General Meeting of Shareholders in a way that ensures maximum protection of shareholder rights. Our Corporate Governance Charter spells out specific details about the rights of ordinary shareholders and the protection of shareholder rights.
Our shareholder rights for proposing meeting agenda items also protect shareholder rights. Shareholders who hold a certain percentage or more of shares may propose a purpose for a General Meeting of Shareholders up to 6 weeks prior to the meeting. In accordance with the Commercial Act, these shareholders can exercise proposal rights either in writing or electronically. In such cases, we review the proposal in accordance with internal procedures and present it at the meeting. As shareholder interest expands into environmental and socially responsible management, we strive to ensure that all topics and forms of the agenda are addressed.
To make sure shareholders view accurate information in our financial reporting material, we prepare and publish a report on the operation of the Internal Accounting Management System that’s reviewed and certified by the Representative Director, the Chief Finance Officer and the Audit Committee.
Separate Submission of Important Agendas
In proposing important agendas, such as the appointment of executive officers or amendments to the Articles of Incorporation, we separate agenda items for each executive officer or article so shareholder intentions are accurately reflected on a case-by-case basis.
By providing advance key information about the agenda of the General Meeting of Shareholders, we ensure shareholders have sufficient time to make the necessary judgments in exercising their voting rights. To help facilitate those judgments, we provide specific information about executive officer candidates, including any relationship with the largest shareholder; any relationship with an affiliate; detailed work experience; the recommendation rationale of the Board of Directors; any fact of arrears; any reason to restrict employment under the law; and/or any other reason for disqualification. When selecting directors who will become members of the Audit Committee, we appoint them independently from other directors while including the financial accounting expertise of the separately appointed auditors.
Dividend Policy
By providing a dividend, or distribution of profits, of payment or shares, we enhanced shareholder value as we expanded the dividend policy and stipulated relevant matters in the Articles of Incorporation. Our dividend policy is explained in our regular reports, such as business reports, quarterly reports and IR materials posted on our website. Dividend payment matters are disclosed through the DART after the resolution of the Board of Directors. Dividends are paid to shareholders within one month of final decisions at the General Meeting of Shareholders.
Dividend Information
| Type of shares | FY 2019 | FY 2020 | FY 2021 | |
|---|---|---|---|---|
| Dividend per share (KRW) | Common share | 700 | 1,000 | 1,500 |
| Preferred share | 750 | 1,050 | 1,550 | |
| Number of dividend shares (in thousands) | Common share | 19,026 | 19,026 | 18,430* |
| Preferred share | 1,357 | 1,357 | 1,357 | |
| Dividend yield (%) | Common share | 2.8% | 1.5% | 3.2% |
| Preferred share | 4.5% | 1.9% | 4.2% |
- * As of the end of 2021, the company’s purchase of 595,357 treasury shares reduced the number of dividend shares.
Disclosure and Improved Accessibility
To help stakeholders better understand our management, we disclose a range of information on our website, including financial information; disclosure information on the DART; notices of a General Meeting of Shareholders; appointments of an independent auditor; and quarterly IR materials. Along with our regular disclosures, we strive to equally provide all shareholders with corporate information that may affect the value of the company.
We make sure all disclosure information is released accurately, completely, fairly and promptly in accordance with our relevant rules and disclosure information management regulations, including disclosure management and operations; assessment and management of disclosure risks; monitoring; and prohibition of unfair trade of officers and employees. To strengthen the expertise and efficiency of disclosures, we designated a specific disclosure officer who completed a required training course to hone his capabilities. In addition, we are expanding shareholder access to corporate information by establishing an ESG website for greater detail about our ESG management.
Corporate Governance Comparison with Best Practices
| Category | Code of Best Practices of Corporate Governance | Acceptance | Details |
|---|---|---|---|
| General Matters | Introducing the Corporate Governance Charter | Yes | Adopted on March 31, 2021 / disclosed via ESG homepage |
| Introducing the Code of Ethics for officers and employees | Yes | Adopted on October 1, 2008 / disclosed via ESG homepage | |
| Board of Directors | Separating CEO and Board Chair positions | Yes | Appointed Board Chair from outside directors |
| Composition of the Board and disclosure of the ratio of outside directors | Yes | As of December 31, 2021, the ratio of outside directors is 57% (3 inside directors, 4 outside directors) | |
| Establishing committees within the Board | Yes | Established and operating Audit Committee, ESG Committee, Nomination and Compensation Committee, Outside Director Candidate Recommendation Committee | |
| Introducing regulations on the roles and operating procedures of the Board and special committees | Yes | Introduced individual regulations for the Board of Directors and each committee / disclosed via ESG homepage | |
| Holding regular Board meetings | Yes | Disclosed via business report and ESG homepage | |
| Providing information about the Board meetings to directors | Yes | Gave notice of agenda 7 days prior to the Board meetings | |
| Disclosure of the history of board activities, attendance rates and affirmative/negative votes on key agenda | Yes | Disclosed via business report and ESG homepage | |
| Composition of committees within the Board | Yes | Disclosed via business report and ESG homepage | |
| Establishment of CEO succession system and internal regulations | - | No such activity | |
| Preparation of the minutes of the Board and committee meetings | Yes | Prepared and preserved the minutes of the Board and committee meetings | |
| Ensuring and then disclosing outside directors’ independence | Yes | Ensured independence by regulations and guidelines / disclosed via ESG homepage | |
| Ensuring Board expertise and diversity | Yes | Ensured independence by regulations and guidelines / disclosed via ESG homepage | |
| Evaluation of the Board and committees within the Board | Yes | Disclosed via business report and ESG homepage | |
| Obtaining liability (D&O) insurance for potential director lawsuits or damages at the expense of the company | Yes | Provided liability insurance for executive officers | |
| Audit Department | Formation of the Audit Committee (all outside directors) | Yes | Disclosed via business report and ESG homepage |
| Enhancing the expertise of the Audit Committee | Yes | Disclosed via business report and ESG homepage | |
| Including accounting or financial experts at the internal audit department | Yes | Included accounting/finance experts in the Audit Committee members | |
| Holding the Audit Committee meeting at least once a quarter | Yes | Disclosed via business report and ESG homepage | |
| Providing education for the internal audit department at least once a year | Yes | Provided two annual education sessions on internal accounting | |
| Support for tapping external advice | Yes | Disclosed via ESG homepage | |
| Maintaining the independence of independent auditors | Yes | Disclosed via ESG homepage | |
| General Meeting of Shareholders | Adopting a cumulative voting system | - | No such activity |
| Notification of a convocation of the meeting 4 weeks prior to the General Meeting of Shareholders | - | Notified a convocation of the meeting 3 weeks prior to the General Meeting of Shareholders | |
| Holding the General Meeting of Shareholders on varying dates | Yes | Held the meeting on varying dates / View more detail at ESG homepage | |
| Disclosure | Accuracy certification for business reports, etc. | Yes | Certified by CEO and responsible executive officer |
| Disclosure of audit reports and important ad hoc disclosures in Korean and English | - | Disclosed the ad hoc disclosures in English since 2022 | |
| Explaining variations from standard best practices | Yes | Disclosed via ESG homepage |
Ownership and Legal Structure
SK discovery is incorporated under the Commercial Act. The status of the largest and major shareholders are as follows (details are also disclosed in the company's business report):
Organization Size
Company sales and total capital by liabilities and assets, as follows:
Sales
| Unit | FY 2019 | FY 2020 | FY 2021 | |
|---|---|---|---|---|
| Sales | KRW million | 24,968 | 21,010 | 35,311 |
Summary of Consolidated Financial Statements (Unit: KRW million)
| FY 2019 | FY 2020 | FY 2021 | |
|---|---|---|---|
| Current assets | 2,014,933 | 2,456,597 | 2,801,641 |
| - Liquid assets | 1,587,032 | 2,068,037 | 2,267,957 |
| - Inventory | 427,901 | 388,560 | 533,684 |
| Non-current assets | 2,985,174 | 3,165,037 | 4,080,232 |
| - Investments in affiliates and joint ventures | 1,123,596 | 1,313,958 | 2,041,580 |
| - Tangible assets | 1,026,578 | 1,038,779 | 1,163,759 |
| - Intangible assets | 113,871 | 115,282 | 149,942 |
| - Other non-current assets | 721,129 | 697,018 | 724,951 |
| Total assets | 5,000,107 | 5,621,634 | 6,881,873 |
| Current liabilities | 1,684,741 | 1,454,470 | 1,977,475 |
| Non-current liabilities | 992,151 | 1,550,803 | 1,835,090 |
| Total liabilities | 2,676,892 | 3,005,273 | 3,812,565 |
| Equity attributable to owners of the parent | 1,682,664 | 1,946,987 | 2,413,291 |
| - Issued capital | 111,677 | 111,677 | 111,677 |
| - Capital surplus | 602,116 | 619,660 | 690,582 |
| - Capital adjustment | (1,109,540) | (1,108,205) | (1,188,448) |
| - Accumulated other comprehensive income | (291) | (2,754) | 287,061 |
| - Retained earnings | 2,078,702 | 2,326,609 | 2,512,419 |
| Non-controlling interest | 640,551 | 669,374 | 656,017 |
| Total equity | 2,323,215 | 2,616,361 | 3,069,308 |
| Total liabilities and equity | 5,000,107 | 5,621,634 | 6,881,873 |
| Number of consolidated subsidiaries | 7 | 8 | 10 |
Summary of Consolidated Income Statements (Unit: KRW million)
| FY 2019 | FY 2020 | FY 2021 | |
|---|---|---|---|
| Sales | 5,021,068 | 4,519,464 | 6,614,328 |
| Operating income | 173,948 | 172,967 | 74,366 |
| Income from continuing operations before taxes | 167,385 | 516,153 | 364,742 |
| Net income from continuing operations | 195,505 | 355,450 | 272,295 |
| Net income from discontinued operations | 54,691 | - | - |
| Net income | 250,197 | 355,450 | 272,295 |
| Net income attributable to: | |||
| Owners of the parent | 180,383 | 267,001 | 212,899 |
| Non-controlling interest | 69,814 | 88,449 | 59,396 |
| Earnings per share attributable to owners of the parent | |||
| Earnings per common share (unit: KRW) | 8,846 | 13,096 | 10,478 |
| Earnings per preferred share (unit: KRW) | 8,896 | 13,146 | 10,569 |
| Earnings per common share from continuing operations (unit: KRW) | 6,164 | 13,096 | 10,478 |
| Earnings per preferred share from continuing operations (unit: KRW) | 6,199 | 13,146 | 10,569 |
| Diluted earnings per common share (unit: KRW) | 8,846 | 13,096 | 10,475 |
| Diluted earnings per preferred share (unit: KRW) | 8,896 | 13,146 | 10,567 |