KT under pressure for transparency, fairness to pick new CEO, again

 

South Korea’s leading telecommunications company KT Corp. will pick a new chief executive after it came under fire over its CEO selection process, which otherwise would have seen the incumbent serve another three-year term.

KT said on Thursday its board of directors has decided to scrap its decision in December to nominate Ku Hyeon-mo as the sole candidate to be the company’s next leader.

In early December, a KT advisory committee reported to the board that Ku is qualified as the company’s next CEO after he previously expressed his intention to serve a consecutive term. He was then named the single candidate for the position. 

In mid-December, Ku asked the board to redo the process of choosing the next CEO from multiple candidates. The board, however, nominated Ku again after reviewing 10 other candidates without revealing their names.

The board decision faced harsh criticism from the company’s largest shareholder, the state-run National Pension Service (NPS), which took issue with the opaque selection process.

Korean President Yoon Suk-yeol also criticized the KT board’s move, saying Ku’s second term might be likened to being “self-appointed.”

Ku, who took the top KT job in 2020, ends his current term next month.

 

ENHANCED SHAREHOLDER ENGAGEMENT

With a 10.35% stake in KT, the NPS has been raising voices for improved corporate governance at companies in which it has invested.

Seo Won-joo, the state-run pension fund’s new chief investment officer, said in December that the fund would strengthen its shareholder engagement, vowing to call for enhanced transparency and fairness in CEO hiring processes at local companies, including KT and POSCO Holdings Inc., where there are no clear dominant shareholders.

Privatized in 2002, KT’s other major shareholders include Shinhan Bank (5.58%); Silchester International Investors LLP (5.07%), a London-based investment firm; Hyundai Motor Co. (4.61%); and Hyundai Mobis Co. (3.1%).

KT said on Thursday its board of directors will receive applications for the new CEO by Feb. 20 and select the preferred candidate by March 10 for approval at a shareholders’ meeting slated for late March.

Ku is widely expected to try again for a second term.

Meanwhile, the company reported its 2022 results on Thursday.

It posted a record operating profit of 1.69 trillion won ($1.34 billion) on a consolidated basis last year, up 1.1% from the year prior.

Sales rose 3% to 25.65 trillion won. Its net profit fell 4.9% to 1.39 trillion won.

Write to Sang-eun Lucia Lee at Selee@hankyung.com

In-Soo Nam edited this article.