NPS opposes KT's sole pick of incumbent CEO for top job

The National Pension Service (NPS), the largest shareholder of KT, voiced opposition to the telecom company’s decision to endorse its incumbent CEO as the sole candidate for the top post.

KT CEO Ku Hyeon-mo gives a speech on KT's ″Digico″ non-telecom business during an event celebrating the 20th anniversary since the company's privatization in August. [KT]

The National Pension Service (NPS), the largest shareholder of KT, voiced opposition to the telecom company’s decision to endorse its incumbent CEO as the sole candidate for the top post.

KT board’s decision is not compliant with the basic principle that a CEO candidate needs to be selected through a fair and transparent process, said NPS Wednesday.

The pension fund did not further specify how the process failed to meet its standard.

NPS is expected to cast an opposing vote against KT CEO Ku Hyeon-mo during a shareholders’ meeting slated for March next year.

NPS holds 10.35 percent of KT as the largest shareholder. Hyundai Motor and Hyundai Mobis hold a combined 7.79 percent, and three Shinhan financial companies — Shinhan Bank, Shinhan Life Insurance, and Shinhan Securities — own a combined 5.4 percent.

On Wednesday, KT said that its board committee selected Ku as the final and only candidate for the CEO position after reviewing 27 potential candidates.

KT’s CEO candidacy review committee already concluded on Dec. 13 that Ku was qualified as the sole candidate to serve another three-year term as CEO.

But Ku asked for a further screening process, to open up the competition to other candidates due to “a major shareholder’s concern on the governance structure of companies with dispersed ownership,” according to KT.

With dispersed ownership, a company has no single investor with a controlling share of the entity.

Ku’s request came after NPS CEO Kim Tae-hyun said in a press conference on Dec. 8 that “there has been not enough consideration or discussion on the appropriate governance structure of companies with dispersed ownership.”

Kim emphasized that such companies have become “fixed to the CEO and problems are arising when CEOs serve consecutive terms."

Following KT’s announcement Wednesday, NPS Chief Investment Officer (CIO) Seo Won-joo said in a statement “our stance is that the decision is not compliant with the basic principle that CEO candidate appointment should take place through a transparent and fair process.”

Seo, who was newly appointed as CIO on Tuesday, said that day that “companies such as KT and Posco, which have dispersed ownership, need to appoint their CEOs through an unbiased, transparent and reasonable process, to address concerns regarding unfair competition and self-appointment."

Ku joined KT in 1987 as a researcher at the economics research center within the company. He has been leading the “Digico” campaign, which has seen KT try to reduce its dependence on the telecommunications businesses.

According to KT, Ku’s leadership skills and bold business portfolio restructuring were some factors in choosing him as the final candidate. He is anticipated to be the first person to have achieved 16 trillion won ($12.6 billion) of service sales during his term.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]