Posco Group tries to dispel NPS concerns over chair appointment

Posco Group announced Friday that the group would make public its chair appointment process, dispelling the National Pension Service’s concerns. The group also refuted suspected use of unfair methods to reappoint incumbent Chairman Choi Jeong-woo.

“Regardless of the incumbent chairman’s decision (to seek a third term at Posco Group), our committee will review all candidates without bias for the sake of Posco’s future and its shareholders,” Seoul National University’s mechanical engineering professor Park Heui-jae, who heads the Posco Holdings CEO recommendation committee, said in a statement released at 1 a.m. on Friday. “If the incumbent chairman seeks a third term, it is entirely up to his decision,” Park added.

Posco Group’s announcement came after Kim Tae-hyun, who heads the NPS, raised concerns over the transparency of Posco Group’s chair appointment process.

The NPS is the largest shareholder of Posco Holdings with a 6.71 percent stake.

“It is uncertain if Posco Group’s chairman appointment process is being made just and transparent,” said Kim Tae-hyun, chief executive officer of the NPS. Like in the case of KT, the appointment process must grant fair opportunities to all candidates, whether from within or outside the company, to maximize shareholder benefits.”

The NPS’ pressure on Posco Group’s leadership transition process raised speculation that Posco Group may follow suit concerning KT, which failed to reappoint former CEO Ku Hyeon-mo after facing opposition from the NPS.

Earlier this year, Ku decided to drop out of the race for the leadership of KT after the NPS, also the largest shareholder of KT, voiced opposition to the telecommunication company’s decision to endorse Ku as the sole candidate for the top post.

Amid pressure from the NPS, Posco Group also introduced measures intended to improve transparency of the process on Friday.

Posco Holdings said it has informed shareholders that anyone with at least 0.5 percent stake in Posco Holdings can recommend a candidate. The group has also selected 10 local executive search firms to submit up to three candidates each for consideration.

Posco Group’s candidate recommendation committee, which consists of seven outside directors, currently plans to take candidate submissions until Jan. 8, 2024, and complete a shortlist of 20-30 candidates by mid-January. The group will narrow down that number to five later in the month. In February, the committee will determine the final candidate and deliver the result to the board. The goal is to decide on the new chairperson at the board meeting in March.

“The process will be made public as often as possible,” Park stressed in his statement.

Previously, the group’s CEO candidate recommendation committee had been criticized largely as the committee automatically included the incumbent chair in the first candidate pool without a public position opening process.

The group said it made changes to the appointment process following a board meeting in December, but others still contend that concerns over the transparency of the process remain.

Meanwhile, industry sources and local reports have viewed the NPS’ recent pressure on Posco Group as government intervention to sabotage the reappointment of Choi, who was appointed under the previous Moon Jae-in administration.