Three Outside Director Candidates Step Down... KT Board Reshuffle Begins in Earnest (Comprehensive)

Amid ongoing management turmoil at KT, three outside directors, including Kang Chung-gu, a professor in the Department of Electrical and Electronic Engineering at Korea University and chairman of KT's board, resigned just before the shareholders' meeting. As a result, only one outside director, Kim Yong-heon, a lawyer at the law firm Dae-ryuk Aju, remains on the board. Analysts suggest that KT's board reshuffle to align with the current government has now begun in earnest.

On the 31st, shareholders are entering the meeting hall at the KT shareholders' meeting held at the KT Research and Development Center in Seocho-gu, Seoul. Photo by Dongju Yoon doso7@

KT announced on the 31st that "three outside directors have resigned," and "the agenda for their reappointment as outside directors has been automatically discarded." KT had planned to propose the reappointment of Professor Kang, Professor Yeo Eun-jung of Chung-Ang University's Business Administration Department, and Byeon Hyun-myung, former CEO of Lotte Rental, for a one-year term extension at the regular shareholders' meeting held at 9 a.m. that day.

With the resignation of these outside directors, the shareholders' meeting only resolved and handled agenda items such as ▲approval of financial statements ▲partial amendments to the articles of incorporation ▲approval of the director remuneration limit ▲revision of executive retirement pay regulations.

Only one outside director, Kim Yong-heon, remains on KT's board. However, under the Commercial Act's provisions on director vacancies, the resigned outside directors can continue to fulfill their duties until a new board is formed. This is possible in the capacity of retired directors. According to Article 386, Paragraph 1 of the Commercial Act, "When the number of directors prescribed by law or the articles of incorporation is not met, directors who have retired due to expiration of term or resignation shall have the rights and duties of directors until newly appointed directors assume office."

The ball now moves to the ‘New Governance Establishment Task Force (TF)’ involving external experts under the acting CEO and Head of Management Planning Division, Park Jong-wook. This TF is responsible for promoting improvements in overall governance, including the procedures for appointing CEOs and outside directors and the role of the board. It is expected that the board reshuffle will proceed to align with the Yoon Seok-yeol administration. The National Pension Service, the largest shareholder representing the government and ruling party's stance, is anticipated to exert significant influence in forming the new board.

At the shareholders' meeting, Acting CEO Park Jong-wook said, "The biggest concern of shareholders is when and how management normalization will be achieved," adding, "We will devote all our efforts to establishing a new governance structure with stakeholders, including shareholders, and restoring normal management."

He stated, "We expect about five months to comply with procedures until management normalization, but we will make every effort to shorten this period as much as possible," and added, "During this time, we will ensure stable operation of key facilities and uninterrupted services provided to customers and the public."

Shareholders expressed their frustration over KT's management turmoil. The KT shareholders' group urged Acting CEO Park, saying, "Shareholders are angry about external pressures occurring every time the government changes," and called for "amendments to the articles of incorporation to prevent management disruptions caused by non-experts and politically affiliated directors." They also demanded ▲implementation of quarterly dividends beneficial to shareholders ▲expansion of the scale of treasury stock cancellation from the recent buyback ▲increase in dividend payout ratio and regularization of treasury stock cancellation.

In response, Acting CEO Park said, "'Parachute prevention' will be achieved through the New Governance Establishment TF," and added, "We will listen carefully to the opinions of shareholders and stakeholders and convey them to the TF."