The Challenging Appointment of KT CEO... Remaining Variables

The KT board of directors has nominated Yoon Kyung-rim, head of the KT Group Transformation Division (President), as the next CEO candidate. The remaining variable now is the shareholders' meeting. The government and ruling party have repeatedly raised issues regarding KT's CEO appointment process. It is difficult to guarantee that the shareholders' meeting will conclude smoothly.

On the 8th, the most likely scenario viewed by the industry regarding the KT CEO appointment is a 'vote battle.' It is expected that whether President Yoon becomes CEO or not, the appointment process will be carried through to the end. In fact, President Yoon expressed his intention to complete the process in a statement released the day before, saying, "I fully empathize with the recent concerns of the government and shareholders. As a candidate, I will actively communicate and align until the shareholders' meeting."

President Yoon plans to meet and persuade the government, political circles, and shareholders directly, but the outlook is not very bright. Among the shortlisted candidates (final interviewees), Yoon was the figure most strongly opposed by the ruling party. Lawmakers from the ruling party on the National Assembly's Science, Technology, Information and Broadcasting Committee publicly targeted CEO Koo Hyun-mo and President Yoon, saying, "There are rampant rumors that former CEO Koo appointed his avatar, Yoon Kyung-rim, head of the KT Group Transformation Division (President), as the CEO candidate," and "This is a typical tactic to maintain an 'interest cartel' by pushing and pulling each other within the interests of certain insiders."

For President Yoon to become CEO, approval from the largest shareholder, the National Pension Service, is necessary at this shareholders' meeting. If Yoon fails to persuade the political circles, the National Pension Service is highly likely to exercise its voting rights against the CEO appointment agenda. Since Hyundai Motor Company and Shinhan Bank, the 2nd and 3rd largest shareholders of KT, respectively, are also shareholders alongside the National Pension Service as the 1st and 2nd largest shareholders, the possibility of Yoon's failure is high.

The only hope for President Yoon is the power of minority shareholders. If minority shareholders actively exercise their shareholder rights, Yoon has a chance of winning.

Although KT's largest shareholder is the National Pension Service, which is cooperating with the ruling party, its shareholding ratio is only in the 9% range. Minority shareholders hold up to 57% of the shares.

Recently, KT's stock price has been continuously declining. KT's market capitalization, which exceeded 10 trillion won last year, has now evaporated by more than 2 trillion won, dropping to the 8 trillion won range. Minority shareholders view the excessive political intervention in private companies as damaging shareholder value.

A KT individual shareholder online community was recently established, and its membership has grown to several hundred since political pressure on the KT CEO appointment process intensified. The purpose of this group is to prevent excessive political intervention in KT through shareholder activism.

It is reported that this group currently holds more than 400,000 shares. The group aims to gather over 1,000 members and more than 5 million shares. However, due to the large number of minority shareholders and their weak cohesion, it is analyzed that it will not be easy to unify opinions.

There is also a possibility that President Yoon may voluntarily resign if he cannot withstand external pressure. In particular, the ruling party continues to link him to former CEO Koo's breach of trust allegations. The ruling party claims that President Yoon was involved in breach of trust allegations related to a company of former CEO Koo's elder brother during his tenure as an executive at Hyundai Motor Company. It is also known that investigative authorities are considering upgrading their internal investigation of President Yoon to a formal investigation. If such judicial pressure continues, it is speculated that President Yoon may not endure and may step down from his candidacy.