CEO Candidate Screening Committee to Prioritize Reappointment Review This Week
Internal Atmosphere Positive, Political External Influence Remains a Variable
[Asia Economy Reporter Lim Hye-seon] KT CEO Koo Hyun-mo (photo) has expressed his intention to seek reappointment, and this week the 'priority review for reappointment' will take place. The internal atmosphere is positive, but last-minute political interference is expected to be a variable.
According to the telecommunications industry on the 5th, the KT CEO candidate review committee, composed of board members, will determine Koo's eligibility for reappointment through the 'priority review for reappointment' this week. The review committee will directly hear from CEO Koo about his achievements over the past three years, as well as his management plans and aspirations for the next three years. The results will be notified next week. If the review committee evaluates him as eligible for reappointment, the board will recommend Koo as the sole candidate for the next CEO. The reappointment will then be finalized at the regular shareholders' meeting in March next year. The board plans to complete this process by the 16th at the latest.
KT's articles of incorporation stipulate that a CEO candidate review committee must be formed three months before the expiration of the term. CEO Koo announced his intention to seek reappointment on the 8th of last month. KT formed the candidate review committee to assess Koo's eligibility for reappointment. The predecessor of the candidate review committee, the CEO recommendation committee, previously reviewed the reappointment eligibility of former Chairman Lee Seok-chae in December 2011 and former Chairman Hwang Chang-gyu in January 2017.
The internal atmosphere is positive. Since taking office, CEO Koo has been credited with transforming KT from a 'telecommunications company' into a 'Digico (digital platform company),' thereby increasing KT's corporate value. In particular, by successfully promoting the drama "Extraordinary Attorney Woo" in the content sector, KT is analyzed to have shed its 'telephone company image' and enhanced its brand value.
Performance and stock prices are also on the rise. KT's standalone operating profit increased by 21.6%, from 878.2 billion KRW in 2020, right after CEO Koo took office, to 1.0682 trillion KRW last year. The securities industry estimates that this year's operating profit will reach 1.211 trillion KRW. KT's stock price closed at 37,450 KRW on the 2nd, a 90% increase compared to 19,700 KRW at the time of Koo's inauguration on March 30, 2020. KT's market capitalization also surpassed 10 trillion KRW for the first time in over nine years since 2013 in August.
At the KT Artificial Intelligence (AI) strategy announcement meeting held on the 16th of last month, CEO Koo said, "In the two years since declaring KT as a Digico, we have achieved high performance in terms of sales and profit growth compared to the past KT," adding, "Whether the changes over two to three years will end there or whether we can structurally change to create new businesses and transform into a new type of business operator, it is still difficult to judge that structural and sustainability have been secured, which is why I am considering reappointment."
While the internal atmosphere regarding CEO Koo's reappointment is positive, political interference remains a variable. Although KT was privatized 20 years ago from a public enterprise, the CEO position has been influenced by the government and political circles. There has been no case of reappointment after a change in administration. Rumors have even surfaced that the ruling party has begun candidate recommendation efforts before the reappointment review for CEO Koo has even started.
KT's largest shareholder is the National Pension Service. CEO Koo may face opposition from the National Pension Service due to his involvement in a political donation support issue, which resulted in a 'fine.' However, the fine does not meet the resignation criteria for the KT CEO position, which requires a sentence of imprisonment or higher. Last year, former and current KT executives were indicted for creating slush funds through a so-called 'gift certificate laundering' method and making 'split donations' to 99 lawmakers from both ruling and opposition parties, with some receiving suspended prison sentences in the first trial. CEO Koo, who was accused of lending his name at the time, received a summary order for a fine of 15 million KRW but appealed the decision.
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