[Inside Chodong] KT, a 'Public' Company Driven into a Leadership Vacuum

KT's process of appointing a new Chief Executive Officer (CEO) has become so tangled that it has ultimately shifted to an emergency management system. Following the refusal of CEO Koo Hyun-mo, who was appointed during the Moon Jae-in administration, to seek reappointment due to overt opposition from the ruling party, even the next CEO candidate, Yoon Kyung-rim, withdrew from the candidacy four days before the shareholders' meeting, continuing the recurring saga of KT CEOs facing difficulties each time the government changes. With Koo, whose term was set to expire on the 31st, hastily resigning on the 28th, Park Jong-wook, head of the Management Planning Division, has stepped in as acting CEO, but a leadership vacuum has become inevitable.

Initially, the ruling party's interference in KT's CEO appointment centered on the issue of an 'interest cartel' within KT. Although KT was privatized 21 years ago and the government no longer has the authority to dictate personnel decisions, the current administration harbored deep distrust toward KT's CEOs and board members, who had been characterized by 'code personnel' and 'parachute appointments.' Candidate Yoon showed reformist intentions by launching a 'Governance Improvement Task Force (TF)' to address criticisms that the KT board was composed of outside directors involved in the incumbent management's interest cartel, which distorted key decision-making. However, as outside director candidates and subsidiary CEOs appointed as pro-government figures declined their positions one after another, Yoon's own standing weakened. When prosecutors launched investigations into allegations of preferential treatment in contract awards, Yoon ultimately gave up.

[Image source=Yonhap News]

KT now faces the challenge of finding a third CEO candidate, but it does not look easy. Although many candidates are being discussed, no outsider can now escape controversy over parachute appointments. Industry insiders believe that even if the board is restructured and new governance and CEO screening committees are established, it will be difficult to appoint a CEO within the first half of the year, considering the time needed for candidate recruitment, screening, and the shareholders' meeting. Even after a CEO is appointed, it will take several months to develop a three-year strategy, and since executive personnel changes have not been made since the end of last year in anticipation of the CEO change, the next management team and organizational restructuring will also need to be redone. Of course, this sequence depends on the proper appointment of a new CEO candidate and the smooth appointment of board members. Realistically, important decisions regarding new investments or new businesses at KT seem impossible this year.

KT is South Korea's leading information and communications technology (ICT) company, with sales of 25 trillion won and over 20,000 employees. As a private telecommunications operator with significant public interest, it must operate transparently and maintain sound governance to avoid harming the interests of the nation and its people. At the same time, due to the regulatory nature of the industry, maintaining a harmonious relationship with the government and ruling party is also important. However, in a situation where the government demands activation of competition in the telecommunications market and global IT companies are fiercely competing in rapid technological advancements such as artificial intelligence (AI), KT's indefinite management vacuum is a matter of great concern not only to stakeholders but also nationally. The damage will directly affect the company's members, shareholders, and the public (consumers). Immediately after candidate Yoon officially withdrew from the CEO race, the securities market lowered KT's target stock price from the 50,000 won range to the 40,000 won range. Domestic and international shareholders and the public are watching closely whether KT, caught in chaos between political pressure and regime appeasement, can quickly overcome this crisis, appoint a new CEO, and achieve a governance improvement worthy of external recognition.