SK D&D publishes the Board Skill Matrix (BSM), a multi-faceted assessment tool that evaluates the skills and competencies of its board members in a matrix format. The BSM of SK D&D is categorized into eight areas: Leadership, Business Development & Strategy, Finance/Accounting & Risk, Legal & Regulatory, ESG, Core Industries (Real Estate, Living Solutions, Energy), Global, and M&A/Capital Markets. It indicates the proportion of board members with expertise and competencies in each category. By leveraging the BSM, we plan to review the composition of the Board of Directors and establish a board comprising members who can create synergies and drive decision-making based on their expertise.

SK D&D regularly conducts training sessions for independent directors to strengthen their expertise. In 2023, all independent directors and audit committee members received focused training on risk management and internal control enhancements due to changes in the business environment, such as spin-off. Additionally, we provide necessary training for audit committee members through programs offered by external professional organizations, such as the Audit Committee Forum and accounting firms.

SK D&D purchases Directors & Officers Liability Insurance at company expense annually to appoint competent directors and protect their work and decision-making activities. Additionally, independent directors may receive support or advice from employees or external experts as needed, with expenses covered by the company, and they may request necessary information from the company's business manager to fulfill their duties. These provisions are specified in our Corporate Governance Charter, and SK D&D actively supports independent directors in discharging their responsibilities.

Since the establishment of the Independent Director Recommendation Committee in June 2021, SK D&D has been protecting shareholders’ rights to appoint independent directors by recommending candidates for appointment at the AGM through the committee. We transparently disclose candidate backgrounds, reasons for the recommendation, and any affiliations with the company in the AGM notices. The Independent Director Recommendation Committee, composed entirely of independent directors, guarantees the fairness of the appointment process by excluding influence from controlling shareholders or management.

When identifying and recommending candidates for independent directors, the committee examines whether the candidates are disqualified by relevant regulations such as the Commercial Act and its Enforcement Decree and verifies their experience and expertise. When appointing directors, we deliberate on their expertise, diversity, and independence to ensure a balanced composition of the board, avoiding bias towards specific backgrounds or professions, with each director's term of office set at three years. Additionally CEO is nominated and proposed for appointment by the HR Committee and appointed by the shareholders' meeting.

SK D&D ensures the independence of its BOD by specifying in its Corporate Governance Charter and committee regulations that each committee within the BOD must consist of a majority of independent directors. In addition, to maintain the fairness and independence of BOD decision-making, SK D&D restricts the voting rights of directors with specific interests in resolutions such as remuneration decisions and director candidate recommendations. Furthermore, SK D&D maintains transparency by reporting the appointment, dismissal, or resignation of independent directors to the Financial Services Commission and the Korea Exchange.

The ESG Committee strengthens the ESG management system at the BOD level by reviewing the company's ESG management strategy and direction, regularly checking performance, and making improvement plans. In setting business management strategies and goals for ESG-related activities, the committee considers environmental management and CSR management policies, and reviews and implements detailed action plans. Notably, it deliberates and provides advice on issues such as implementing Net Zero, managing climate change response risks, establishing eco-friendly business directions, and managing greenhouse gas emissions to actively review the performance of environmental management activities at the BOD level. The committee also identifies ESG risks and opportunities throughout the business’s value chain of the business, and establishes and executes frameworks to respond to them.

The Planning Management Part and ESG Part, which are operational departments for ESG management, conduct materiality assessments to identify the company's sustainability issues, impacts, risks, and opportunities, and report best practices and improvement plans to the ESG Committee. They also collaborate with relevant departments in the environment, social, and governance areas to establish and implement improvement initiatives for each issue and share the results with the ESG Committee.

Regulations of the ESG Committee

The HR Committee, also known as the Nomination and Compensation Committee, reviews the evaluation and retention of the CEO, assesses the appropriateness of executive directors' remuneration, and receives reports on the evaluation and remuneration of key executives, integrating the functions of the Remuneration Committee. The HR Committee also evaluates the CEO's management activities and performance, and checks the implementation of KPIs by the CEO and key executives to support management in carrying out its responsibilities in ESG management.

Regulations of the Nomination and Compensation Committee

The Audit Committee oversees all aspects of auditing, including auditing financial statements, appointing external auditors and evaluating the operational status of internal accounting management, as well as performing management oversight functions for ethical and anti-corruption management. To maintain independence, the committee comprises three independent directors, each meeting the qualifications stipulated in the Commercial Act, with the chairperson appointed from experts in accounting and finance. Moreover, the committee conducts training sessions on laws related to external audits and the Internal Accounting Control System at least once a month to enhance its audit expertise. The Internal Control Part supports the operational activities of the Audit Committee and maintains regular communication with external auditors to ensure effective operations.

Regulations of the Audit Committee

The Independent Director Recommendation Committee operates with all members being independent directors, in accordance with relevant commercial laws and the company's Independent Director Recommendation Committee Regulations, to ensure fairness and independence in the appointment of independent directors and the committee's operations. The committee holds the authority to recommend candidates for independent directors to be appointed at the shareholders' meeting. It conducts prior deliberation and verification of candidates' disqualifications and expertise for selecting independent director candidates, ensuring they have no significant conflicts of interest with the company (including affiliated companies).

Regulations of the Independent Director Recommendation Committee