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Pritchard, A.C. --- "Monitoring of Corporate Groups by Independent Directors" [2012] ELECD 870; in Kim, Hwa-Jin (ed), "Korean Business Law" (Edward Elgar Publishing, 2012)

Book Title: Korean Business Law

Editor(s): Kim, Hwa-Jin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781003398

Section: Chapter 4

Section Title: Monitoring of Corporate Groups by Independent Directors

Author(s): Pritchard, A.C.

Number of pages: 24

Extract:

4. Monitoring of corporate groups by
independent directors
A.C. Pritchard*

I. INTRODUCTION

Independent directors have become a popular "cure-all" in the United
States for whatever the latest malady ailing the modern corporation
happens to be. Whenever a corporation has found its way into the head-
lines as the subject of the scandal du jour, it is overwhelmingly the case
that it is the managers who are caught with their fingers in the till, having
manipulated the numbers, rolling the dice with the shareholders' money,
or otherwise abusing the trust of shareholders and other corporate con-
stituencies. They are, after all, the ones in charge of the day-to-day opera-
tions of the company. All too frequently the managers, who have charged
some outrageous perk to the corporation's bill, or who have relabeled an
expense as a capital expenditure, are at the very top levels of the corporate
hierarchy, perhaps even serving on the board. Immunity from greed, fear,
and other weaknesses of character are apparently not required to advance
to the top of the corporate hierarchy.
It is the venality at the very top that most offends. Given the lofty levels
of compensation that CEOs in the United States typically receive, it is hard
for the average person (or more importantly, the average politician) to
understand the desire for further aggrandizement and reluctance to accept
responsibility for poor performance. One suspects that sense of outrage at
the abuse of trust is mirrored, and perhaps magnified, inside ...