POSCO scraps CEO reappointment rule

[Courtesy of POSCO]

South Korea’s POSCO Group plans to reform its rules regarding the selection of its leadership, which has been a subject of criticism, and intends to begin discussions on selecting the next chairman.

According to sources, POSCO Holdings held a board meeting on Tuesday in Seoul to discuss improvements in its governance structure.

The board settled on four major improvements concerning the appointment of its leader.

The controversial practice of giving priority consideration for the incumbent chairman’s reappointment was abolished.

Previously, POSCO Group had given the incumbent chairman an automatic priority review if the leader expressed the intention to extend his or her tenure.

Now, regardless of the incumbent chairman’s intentions, the process for appointing a new chairman will commence three months before the expiration of the incumbent’s term.

Previously, the group had initiated the selection process only after the incumbent chairman expressed his or her intentions.

The board also decided to disband the CEO Succession Council, established for identifying potential new chairmen, and to expand the role of the CEO Candidate Recommendation Committee (CCRC).

The CCRC will now be responsible for both identifying potential chairman candidates and conducting eligibility assessments. The group will introduce an advisory panel composed of external figures, not internal or external directors, to assess and incorporate evaluation opinions into the selection process.

Furthermore, starting next year, POSCO Group will operate a permanent Chairman Candidate Management Committee under the board to proactively identify and nurture potential chairman candidates.

The committee aims to constantly identify internal candidates through in-house chairman candidate development programs while also scouting external candidates through shareholder recommendations and search firms to increase the predictability of potential successors.

Based on these governance improvements, POSCO Holdings intends to convene an extraordinary board meeting on December 21 to pass a resolution activating the CCRC and officially commencing the process for selecting the next chairman.

Once this selection process gets underway, it will be determined whether current POSCO Group CEO Choi Jeong-woo will seek reappointment.

If Choi, the first case subject to these reforms, expresses an intention to extend his tenure, he will enter the pool of candidates for the selection process, gearing up for the competition ahead.