FAQ| IR

Pursue Global Best Practices of Corporate Governance

  • Transparent Management

    S-OIL practices transparent management through corporate governance pursuing checks and balances.

  • Ethics Management

    We are also making a concerted effort to establish compliance management as a corporate culture and encourage our business partners to promote ethics management with the aim of improving transparency throughout the supply chain.

Corporate Governance Pursuing Checks and Balances Corporate Sustainability is founded upon transparent corporate governance. S-OIL has established sound and transparent corporate governance through the constitution of the Board of Directors (BOD) and their expert activities rooted in an appropriate level of checks and balances.

Organizing the BOD with Expertise

S-OIL’s Board of Directors consists of one inside director, four non-standing directors, and six outside directors. The objective and independent supervision over management activities by the BOD is ensured by the Board composition, where all of the directors are non-standing except for the CEO who is an inside director. As set forth in the Company’s internal procedure to ensure the unbiased and fair appointment of directors, the most qualified applicants undergo an in-depth examination and verification process before being recommended to the General Shareholders’ Meeting. They are screened for management vision and leadership, expertise, past career experience, and competency to carry out an independent and objective role of outside director. In particular, the Outside Director Candidates Recommendation (ODCR) Committee directly selects and recommends the most suitable candidates with no vested interest in the Company in accordance with relevant laws. The newly launched Board of Directors at S-OIL in 2016 is led by directors with a long-term vision in the face of a rapidly changing business environment. Their abundant experience and expertise in government, international organizations, industry, and academia have taken the professionalism and independence of the BOD to the next level.

Operating Unbiased and Objective Decision-making Process

To meet stakeholder’s expectations on the Company and ensure sustainable growth, S-OIL’s BOD adheres to an unbiased and transparent process to make well-informed and reasonable decisions. Convening on a quarterly basis, the BOD draws upon their unmatched expertise and rich experience from decades of engagement in the nation’s energy industry policies. They remain strictly neutral and objective in making suggestions and decisions on the Company’s strategically critical management issues. Furthermore, the BOD is called upon to supervise major business issues along with the authority over Corporate Social Responsibility and Sustainability Management issues.

Separation of the Roles of the BOD Chairman and the CEO

S-OIL has separated the roles of the BOD chairman and the CEO since 2003. Under this system, the CEO can carry out responsible management by channeling all of his attention into the Company’s management while the BOD chairman oversees the CEO’s management activities from a neutral perspective. Thus, decisions are always made in a way that reflects shareholders’ value, resulting in maximizing stakeholders’ interest.

Subcommittees in support of the BOD

S-OIL has three sub-committees in support of the BOD’s efficient and professional activities: the Audit Committee, the Compensation Committee, and the Outside Director Candidates Recommendation (ODCR) Committee. The Audit Committee, consisting of four outside directors, evaluates overall business activities and the current status of the Internal Accounting Control System, and receives internal audit reports. The Committee also proactively engages in Ethics Management as it makes suggestions to top management about business ethics practices and receives annual reports on ethics management activities from the Ethics Committee. Comprised of three outside directors and one non-standing director, the Compensation Committee develops the Company’s compensation policies and systems by taking into consideration the Company’s business performances, rate of inflation, and wage competitiveness. The ODCR Committee, which consists of four outside directors, examines the qualifications of the candidates for outside directors as specified in relevant rules and regulations, and selects and recommends the candidates deemed most qualified to carry out the role of outside director to the General Shareholders’ Meeting.
BOD Composition (as of September, 2016)
BOD Composition : Classification, Name, Position & Duty Table.
Classification Name Position & Duty
Inside Director (1) Othman Al-Gamdi

President & CEO

Non-standing Directors (4) A.I. Al-Saadan
S.A. Al-Hadrami

Member of the Compensation Committee

S.M. Al-Hereagi
N.A. Al-Nuaim
Outside Directors (6) Y.A. Al-Zaid

Chairman of the Audit Committee

Member of the ODCR Committee

A.A. Al-Talhah

Member of the Audit Committee

Member of the ODCR Committee

Member of the Compensation Committee

C. S. Kim

Chairman of the BOD

S. W. Lee

Chairman of the ODCR Committee

S. W. Hong

Chairman of the Compensation Committee

Member of the Audit Committee

E. S. Shin

Member of the Audit Committee

Member of the ODCR Committee

Member of the Compenstaion Committee

Enhancing Compliance Activities As part of its pursuit of becoming an advanced global company, S-OIL has established internal regulations stricter than legal requirements to prevent violations of all laws and regulations. We strive to ensure that all our stakeholders understand our expectations in terms of the economy, the environment, and our society, and how we are reflecting them in carrying out our business.

Establishment of Compliance Management

There are prerequisites for compliance management to become fully embedded in corporate culture; (i) top management’s unwavering determination towards compliance management; (ii) systematic and professional support through a compliance system; and (iii) employees’ full engagement in compliance activities. S-OIL launched its compliance system in 2014 after two years of preparation. In the same year, S-OIL appointed a Compliance Officer and formed the Compliance Team, solidifying the company-wide compliance management. In 2015, we completed the establishment of the IT-based compliance system to enhance the efficiency. Although S-OIL is now recognized as a leader in the field of compliance management, we will spearhead the initiative towards embedding unique compliance within its corporate culture by encouraging the entire workforce to practice compliance management.
Advancing the Compliance System
S-OIL has put in place a 3 step compliance monitoring process which consists of (i) Self-Assessment of Employees, (ii) Frequent/Special Monitoring, and (iii) Rotational Priority Management on areas of particular importance such as industrial safety, environmental protection etc. The Company also opened an interactive communication channel between front-line employees and the Compliance Team in order to give a full support by enhancing the compliance system. In addition, by advancing the compliance system as required by the Commercial Law and ISO19600 Compliance Management Systems Guidelines*, S-OIL has brought its compliance system up to global standards.
* The guidelines to establish, develop, operate, evaluate, maintain, and improve the compliance system
Enhancing Compliance Activities Based on IT System
S-OIL has established the IT-based compliance system which facilitates compliance activities in everyday jobs. Through this system, all compliance activities are systematically managed, and we are able to monitor and at the same time support compliance activities taking place company-wide in real time. Furthermore, designed to stay synchronized with official government sites for Korean legal information maintained by the Korean Ministry of Government Legislation, S-OIL’s compliance system ensures its employees stay up-to-date on revisions or amendments of relevant laws.
Activities for Fair Trade
Boosted by CEO’s strong commitment to reinforce compliance management, especially in relation to antitrust laws, S-OIL published guidelines that employees have to follow for sales activities. The guidelines, shared with all employees, describe detailed action guides and Dos & Don’ts that are applied to sales activities. S-OIL also signed an outsourcing contract with an external education agency to offer regular sessions on antitrust laws and fair trade to its employees. As a result of these efforts, S-OIL recorded no violation of antitrust laws for the past three years.
Policies and Activities to Enhance Employees’ Compliance with Regulations
As an institutional framework to allow all officers and employees to internalize the company’s rules and regulations and comply with them in conducting their daily job activities, the Compliance Monitoring System was implemented in 2011, which has minimized unnecessary confusion and risks associated with non-compliance. Monitoring is conducted every three months against a checklist of 120 items related to 37 regulations, and the results are reflected in the performance assessment of each team and department so that employees can voluntarily adhere to the company’s rules and policies at work.

Enhancing Corporate Value through Transparent Management Practices

An Audit Organization for Higher Transparency
S-OIL has an independent audit organization under the control of the Audit Committee, which carries out an unbiased and independent audit on corporate accounting and business activities, and thus plays a key role in promoting corporate transparency and maintaining a sound internal control system. Members of the audit organization are encouraged to obtain either a Certified Public Accountant (CPA) degree, Certified Internal Auditor (CIA) degree, or Certified Information System Auditor (CISA) degree to cultivate expertise related to their job functions. The Company also provides these staff members with the opportunity to participate in various audit training programs and audit specialist programs with the help of external specialists, while making use of auditing software programs to enhance the expertise of auditing activities. In 2012, S-OIL received Korea’s Best Auditor Award from the Financial Supervisory Service and the Korea Listed Companies Association(KLCA) for its advanced internal control system and its audit and risk management system, in compliance with the highest global standards.
Process Innovation Auditing for Higher Corporate Value
S-OIL, in addition to legal compliance activities, also stresses on the audit activities of commercial and practical process innovation deemed material by its internal clients. The audit organization recently recommended that the Company enhance its procurement process. In accordance with that, S-OIL became the first in Korea to successfully introduce Auto Invitation as well as a Blind Bidding System through benchmarking and consultancy services, thereby taking its transparency in procurement to the next level. S-OIL also carried out audits aimed at maximizing corporate value by setting up a round-the-clock monitoring system overseeing its mega-projects in 2014.

Strengthening Ethics Management S-OIL’s CEO, executives, and employees participate in an ethics management system because they believe that ethics management contributes to the long-term growth of a company. We also disseminate this belief among our business partners, so that we can continue to grow together.

Ethics Management System

Education on Ethics Management, Code of Business Ethics & Conduct, Ethics Committee

Code of Business Ethics and Conduct
S-OIL’s Code of Business Ethics and Conduct consists of two parts; Code of Business Ethics stipulates attitudes toward customers, business partners, shareholders, and investors as well as responsibilities to officers and employees, the society and community; and Code of Conduct defines basic ethics for officers and employees, prohibition of conflict of interests, prohibition of bribery/entertainment/convenience, and how to report violations. The Code of Business Ethics and Conduct also has three sub-regulations as follows; detailed implementation procedure; employee’s possession or operation of sales networks of competitors; and outside reporting or inquiry process on issues with regard to ethics management. Code of Business Ethics and Conduct is constantly updated and amended in response to social demands. Most notably, S-OIL is sharing it with an increasing number of outside organizations so as to reinforce ethics management in our business partners. Furthermore, we support our business partners to properly understand these codes, while asking them to sign the ‘a pledge to comply with the Code of Ethics & Conduct for suppliers and bidders’ prior to all trades. Partners found to have illegal or unethical activities are excluded from the list of S-OIL partner companies.
Ethics Committee
The Ethics Committee is comprised of four executives who are General Counsel, Head of HR Div., Head of Corporate Planning Div., and Controller. They are appointed by the CEO after eligibility assessment by the Audit Committee under the BOD. The Committee enhances the Company’s ethics management and accomplishes best ethical decision makings regarding ethics-related matters including the conflict of interests. The Committee reports its activities to the CEO and the Audit Committee once a year and its activities are disclosed to all employees via S-OIL Ethics Management website.
Deliberation by the Ethics Committee in 2015
(19 meetings) Unit : cases
Deliberation by the Ethics Committee in 2015 (19 meetings) : Proposed bills Table.
Proposed bills  
Total 87
Operation of sales networks 57
Purchasing of products and services 25
Others 5
In particular, any transaction between retirees or employees' family members is required to undergo a thorough preliminary review by the Ethics Committee so as to ensure fair competition opportunities. In 2015, two cases of ethics violations involving transaction with customers were reported. After taking disciplinary measures against the violators, we held three ethics education sessions for 180 employees responsible for relevant duties to prevent a recurrence of similar cases. Further, to raise employees' awareness for business ethics in sales activities, employees were provided with 5 major guidelines on how to abide by the Code of Ethics.
Ethics Management Education
S-OIL continuously conducts ethics management education tailored to different positions and job functions to instill business ethics into daily business activities. The quality of training programs was also significantly enhanced with external experts invited to give lectures. In particular, S-OIL supports its business partners to understand the basic guiding principles and contents of the Company’s Code of Business Ethics and Conduct, thereby enhancing the ethics standards throughout the supply chain. Ethics management education for business partners started in 2013 and a total of 282 employees from 255 business partners attended the education in 2014. S-OIL plans to support ethics management of its affiliates, including subsidiaries and joint ventures as well.
Ethical Management Education
Ethical Management Education : Year, No. of programs, No. of participants, Education hour Table.
Year No. of programs No. of participants Education hour
2013 10 3,156 persons 3,291 hours
2014 9 2,973 persons 4,119 hours
2015 7 3,063 persons 4,470 hours
Ethical Management Education for Business Partners or Joint Venture
Ethical Management Education for Business Partners : Year, No. of programs, No. of business partners, No. of participants Table.
Year No. of programs No. of business partners No. of participants
2013 5 307 companies 362 persons
2014 5 255 companies 282 persons
2015 5 1 company(STLC) 137 persons
Self-assessments of the Code of Business Ethics & Conduct
S-OIL has run self-assessments on business ethics since January 2015 to ensure that ethics management takes a firm root in the everyday lives of employees.
The self-assessment consists of 42 questions; 9 questions on basic ethics and 33 questions on business ethics for interested parties. The business ethics for interested parties is classified into three categories; customers, officers & employees, and society & community. Each category comes with three items including general business ethics, prohibition of conflict of interests, and prohibition of bribery/entertainment/convenience. S-OIL conducted self-assessments involving all officers and employees through the intranet in January 2016. In the assessment that drew 86% of the entire workforce, or 2,492 employees, the Company recorded an average point of 99.0. S-OIL plans to conduct self-assessments every year and design ethics management education reflecting its results, thus establishing ethics management firmly within its corporate culture.

Efforts Towards Shared Growth with Partner Companies

Upgrading of Procurement Procedures

S-OIL introduced a new procurement process in August 2013 such as Auto-Invitation and Blind-Bidding, greatly improving transparency, objectivity, and fairness in procurement. The auto-invitation system automatically invites all companies registered in sourcing group list to the bids for new projects. Blind bidding refers to the preliminary computerized screening of bidders based on submitted project budgets. The new process allows higher transparency and fairness in bidding processes. In the future, we plan on further improving the procurement process and system based on a continuous communication with partner companies.

Improve the Supplier Relationship Management (SRM) System

S-OIL adopted a Supplier Relationship Management (SRM) system in 2010 to ensure a transparent and fair evaluation in selecting its suppliers. S-OIL conducted a general assessment based on the credit assessment result rendered by KED and vendor performance evaluation, reinforcing the objectiveness and credibility of the SRM system.

Communication with Partner Companies for Sustainable Trust-based Relationships

S-OIL maintains trust-based, long-term relationships with its partner companies through continuous communication, for the purpose of enhancing the level of mutual understanding. In 2014, we held a total of five meetings with 282 partner companies, which served as good opportunities for S-OIL to its objective procurement system and ethics management principles. The meetings also proved resourceful for partner companies to make suggestions and grievances, as well as in presenting new products and services, and informing S-OIL of new trends and technologies in the industry.
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