Will the First POSCO Chairman Attempt a Third Term?... Choi Jung-woo's Fateful Week

On the 19th, POSCO Holdings Board Meeting Likely to Abolish 'Self Reappointment' Rule

Choi Jung-woo, Chairman of POSCO Group. Photo by POSCO Group

There is a growing atmosphere suggesting that Choi Jeong-woo, chairman of the POSCO Group, is close to attempting a third term. In particular, just before the board of directors, which is revising the 'self-renewal' regulation due to concerns about external influence, convened, Chairman Choi's purchase of company shares has led to interpretations that he may be signaling his intention to seek reappointment.

On the 19th, POSCO Holdings is expected to hold a board meeting at the POSCO Center in Seoul to discuss and finalize improvements to the next chairman election process. Until now, when the incumbent CEO expressed an intention to renew their term, POSCO Group would prioritize reviewing the incumbent before other candidates and decide on reappointment based on eligibility. At this board meeting, it is expected that the current detailed operating regulations (articles of incorporation) of the board will be abolished. These regulations have been at the center of controversy over 'self-renewal' and 'preferential treatment.'

If these regulations are removed through the board meeting, even if the incumbent CEO expresses a desire for reappointment, they will be evaluated under the same conditions as other candidates. The CEO Candidate Recommendation Committee will select a suitable candidate and recommend one final candidate to the regular shareholders' meeting as the CEO nominee. Since March this year, POSCO has launched an 'Advanced Governance Task Force (TF)' to change the chairman election method and has been preparing an improvement plan that includes these changes. The intention is to create a so-called 'level playing field' to prevent controversies over preferential treatment. The results of the board meeting are expected to be announced late in the afternoon.

Chairman Choi hinted at his intention to seek reappointment by purchasing company shares. According to the Financial Supervisory Service's electronic disclosure system on the previous day, Chairman Choi purchased 700 shares of POSCO Holdings on the 11th in two separate transactions on the market. He spent a total of 307.1 million KRW to acquire all 700 shares. As a result, the number of POSCO Holdings shares held by Chairman Choi increased from 3,338 to 4,038. On the same day he purchased the shares, the 11th, Chairman Choi also visited the grave of Honorary Chairman Park Tae-joon to pay respects. This is interpreted as showing his determination to seek reappointment. The company stated that "it is understood that the shares were acquired for personal investment purposes."

Choi Jung-woo, Chairman of POSCO Group, attending the groundbreaking ceremony of the lithium extraction demo plant in Argentina in October 2019. Photo by POSCO Group

If Chairman Choi attempts a third term, he will become the first in the group's history to do so. He assumed the chairman position in July 2018 and successfully renewed his term in March 2021, currently serving as chairman for five years and five months. His second term ends in March next year. Chairman Choi must notify the board of directors of his intention regarding reappointment at least 90 days before the shareholders' meeting scheduled for March next year. Considering that the POSCO Holdings shareholders' meeting is usually held in mid-March, this week is the 'deadline' to declare his intention to renew. During Chairman Choi's tenure, POSCO Group has successfully reorganized its business around seven core sectors, including secondary battery materials. The market capitalization of major listed companies has increased from 30 trillion KRW at the beginning of his tenure to over 100 trillion KRW currently.

However, even if he succeeds in a third term, the ongoing strained relationship with the government remains a burden for the group. For this reason, there is also an opinion that Chairman Choi might announce his intention to step down around this board meeting. If this happens, the first step in selecting the next chairman, the 'CEO Succession Council,' will be formed. The council selects the first pool of next chairman candidates, refers them to the CEO Candidate Recommendation Committee, which then selects the final candidate.

The POSCO Group chairman position has been subject to external pressures every time the government changed since privatization in 2000. The National Pension Service, which holds a 7.25% stake and is the largest shareholder of POSCO, creates an environment where government influence is unavoidable. Even regarding this chairman election, external candidates from ministerial or business backgrounds have been rumored. However, POSCO Group has maintained its own organizational culture by appointing internal personnel as CEOs for a long time. So far, the only chairman from outside the company was the 4th chairman, Kim Man-je, who previously served as Minister of Finance and Deputy Prime Minister.