The Korean market has been given an unflattering nickname, “Korean discount,” referring to lower price-earnings ratio of local stocks when compared to global peers. According to foreign and domestic experts, this discount is likely due to Korean corporations’ opaque public disclosures and non-accountable governance structure.

However, both investors and regulators are taking steps to improve the standing of Korean corporate issuers. A number of global asset management firms such as BlackRock, which is estimated to be the second- or third-largest shareholder of over half the companies listed on the KOSPI 100, have begun encouraging Korean corporations to establish their mid to long-term ESG strategies. In response to this trend, the Korean government has introduced laws and regulations to strengthen its corporate governance system, including the adoption of a gender quota system for female directors.

The original bill, proposed in 2018, would have required the boards of companies with total assets exceeding KRW 2 trillion (Large Companies) to consist of no more than two-thirds of one gender, on comply or explain basis. Where either gender represented less than one-third of the board, companies would have been required to disclose the reasons for non-compliance. However, the final bill set the gender quota rules more loosely. Rather than one-third of the board, the final bill requires that only one director represent each gender, and also removes disclosure requirements or any other form of sanction in the event of non-compliance.

After a two-year grace period, the rules became mandatory from August 2022. During the recent 2023 proxy season in Korea, Glass Lewis took a close look at how large companies were responding to the requirements, and found slow progress. Our new special report, Gender Diversity in Korea, includes data on the appointment of women directors and executives at large Korean companies, along with background and analysis of the market and potential obstacles going forward.

Looking for more?

Part of our growing library of special reports that provide exclusive data and analysis from our regional experts, Gender Diversity in Korea is available to Glass Lewis clients on Viewpoint and Governance Hub.

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GROW@glasslewis.com (Institutional Investors) | ENGAGE@glasslewis.com (Corporate Issuers)