KT Corp. Chief Executive Ku Hyeon-mo has abandoned his ambitious bid to lead South Korea’s largest telecommunications company for another three years – the latest to succumb to growing calls for enhanced corporate governance.
His thwarted bid follows weeks of strong requests by KT’s largest shareholder, the state-run National Pension Service (NPS), and Korean President Yoon Suk-yeol that the telecom company fix its opaque process in choosing the next CEO.
Industry officials, however, said that KT could be a victim of growing political clout in corporate matters at the cost of growth prospects, management independence and profitability.
KT’s board of directors announced on Thursday that it has excluded Ku from the list of CEO candidates after he officially said he’s pulling out of the race.
Despite his renunciation, he will continue to work in his capacity as chief executive until the new CEO is chosen and confirmed at KT’s general shareholders’ meeting in late March.
He will also attend Mobile World Congress 2023, the world’s largest wireless technology expo, which opens next week in Barcelona.
KT is Korea's leading landline, mobile telecom behemoth STRONG HEADWINDS
Ku, who took the top KT job in 2020, showed his determination to serve another term until recently, encouraged by the company’s robust 2022 business performance.
In early December, a KT advisory committee reported to the board that Ku is qualified to be 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 and choose 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 NPS, KT’s largest shareholder with a 10.35% stake, which took issue with the selection process.
Korean President Yoon also criticized KT board’s move, saying Ku’s second term might be likened to being “self-appointed.”
Under pressure, KT’s board of directors later scrapped its December decision to nominate Ku as the sole candidate to be the telecom company’s next leader.
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, calling 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.
KT CEO Ku speaks at an event celebrating the company’s 20th anniversary of privatization CREDITED WITH DIGITAL TRANSFORMATION
The incumbent CEO, who worked at KT for more than 35 years, has been credited with KT’s transformation into a digital tech company from a landline and mobile telecom behemoth, as well as improved profitability.
The company posted a record operating profit of 1.69 trillion won ($1.34 billion) on a consolidated basis in 2022, up 1.1% from the year prior. Sales rose 3% to 25.65 trillion won.
KT’s board, which recently received applications from 33 new candidates, including 15 KT executives, plans to review them by the end of February.
After receiving opinions from the NPS and other interested parties, including KT’s labor union leaders, the board will select the preferred candidate by March 7 for approval at the shareholders’ meeting.
Those who have tendered their bids include former Commerce, Industry and Energy Minister Yoon Jin-shik; Kim Jong-hoon, former Minister for Trade; Kim Seong-tae, a member of the Presidential Committee on the Digital Platform Government; Yoon Jong-rok, vice minister of Science and ICT; and ex-KT corporate business chief Park Yoon-young.
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%).
Write to Sang-eun Lucia Lee at selee@hankyung.com In-Soo Nam edited this article.
