Posco Holdings criticized by NPS head for opaque appointments

The head of the National Pension Service (NPS), the largest shareholder of Posco Holdings, openly criticized the steel group's chairman selection process due to its involving of the current chairman in the procedure.

Chairman Choi Jeong-woo of Posco Group delivers a congratulatory speech at an event on Sept. 5 in Pohang, North Gyeongsang. [YONHAP]

The head of the National Pension Service (NPS), the largest shareholder of Posco Holdings, openly criticized the steel group's chairman selection process due to its involving of the current chairman in the procedure.

The NPS holds a 6.71 percent stake in Posco Holdings.

In an interview with a local media outlet the previous day, NPS head Kim Tae-hyun emphasized the need for an open chairman appointment process "conducted transparently and fairly," while pointing out a "deficiency in representing shareholder interests and ensuring fairness."

The core issue revolves around the perceived fairness of Choi Jeong-woo's bid for a third term as chairman of Posco Holdings. The Posco CEO Recommendation Committee, predominantly composed of outside directors, six out of seven of which were chosen during Choi's term, automatically included Choi in the initial candidate pool without holding a separate public recruitment process or obtaining the consent of involved parties. This has raised suspicions of implicit support for Choi's third term or the recommendation of a successor closely aligned with him.

"Company employees, including the chairman, have no authority to be involved in the chairman appointment process," Park Heui-jae, head of the CEO Recommendation Committee at Posco Holdings, said in a phone call with the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily, on Friday.

He added the candidate recommendation process is "perfectly fair."

"It is necessary for shareholders and the market to judge whether the current structure, composed only of external directors, is fair and genuinely represents the interests of shareholders,” NPS's Kim told the JoongAng Ilbo on Friday. “The appointment of the chairman should be carried out publicly according to transparent criteria and procedures."

Park, however, said, "Applying for a third term is an individual's freedom and choice, so there is no problem at all.

"I can guarantee that a fair evaluation will be conducted, unaffected by even 0.1 percent of external influence," Park continued. "They are all external directors recommended from outside sources, and there is no room for the company's interference."

Speculation within the business community suggests that Posco Holdings may follow a similar tumultuous path to that which was navigated by KT last year, which involved proactive intervention in the appointment of the CEO in a widely-held firm. The NPS also serves as the largest shareholder of the telecom company.

In a departure from the norm, the NPS issued a press release stating, "The competition does not conform to basic principles," making those seeking re-election, such as then-KT CEO Ku Hyeon-mo and his close associate and head of KT Group's transformation division Yun Kyoung-lim, facing consecutive defeats.

Major shareholders, including the NPS, established a task force for new governance, and underwent a major reorganization, with the new director candidate recommendation committee selecting the final CEO candidate pool through an external selection process.

After approximately nine months of grappling with a management vacuum, KT welcomed Kim Young-shub, a former LG Uplus executive, as its new president.

Posco's CEO Recommendation Committee held its third meeting Friday, sending letters to shareholders, including the NPS, seeking recommendations for the impending chairman. Additionally, the committee said that anyone interested can submit their applications through any of 10 specified headhunting agencies.

BY KIM SU-MIN, SEO JI-EUN [seo.jieun1@joongang.co.kr]