[Exclusive] "POSCO's Management Structure Prevents Interference from Outside Directors... Don't Worry"

Park Hee-jae, POSCO Holdings CEO and Chair of the Nomination Committee, Phone Call
Strong Rebuttal to Kim Tae-hyun, National Pension Service Chairman's Remarks
"Mention of 'Personal Freedom' in Statement Does Not Even 0.1% Suggest Reappointment"
"1 AM Statement Release Reflects Late-Night Meeting Outcome"

"The current chairman's intention to seek reappointment does not affect the evaluation of the next candidate at all. The screening will be conducted fairly and transparently, so there is no need to worry."

Park Hee-jae, chairman of the POSCO Holdings CEO Candidate Recommendation Committee (CRC), strongly rebutted the remarks made by Kim Tae-hyun, chairman of the National Pension Service, who criticized the CEO appointment process at POSCO Holdings. Park sharply pointed out that the structure is designed so that management cannot exert influence over outside directors. Park, who issued a rebuttal statement on the 29th of last month immediately after Kim’s remarks, once again emphasized through a voice message that there is absolutely no problem with the CEO appointment process.

On the 2nd, Park refuted the issues raised during the procedure in detail during a phone interview with Asia Economy. He said, "They say it’s a problem that outside directors were appointed while the current CEO was in office, but he has been reappointed twice, so how could the outside directors not have been reappointed during that time? It doesn’t make logical sense." He added, "POSCO has a structure where management cannot interfere with outside directors at all."

Choi Jung-woo, Chairman of POSCO Group, is delivering the keynote speech at the 'Innovation Technology Conference' hosted by the World Steel Association held in Abu Dhabi, UAE, on December 5 last year. Photo by POSCO Group

The appointment of outside directors at POSCO Holdings is handled by the Outside Director Candidate Recommendation Committee, composed of three outside directors, who conduct qualification screening and candidate recommendations. A panel of five senior advisors proposes three times the number of candidates for outside directors to the Candidate Recommendation Committee, which then recommends the final candidates to the shareholders' meeting after qualification screening.

He said, "Since the Outside Director Candidate Recommendation Committee narrows down candidates and directly submits them to the shareholders' meeting, the current management structurally cannot participate and does not even know who the candidates are," adding, "The fact that they were appointed during the current chairman’s term means they were appointed at shareholders' meetings held during the chairman’s term, and has nothing to do with the chairman himself."

Regarding the CRC’s statement that "the current chairman’s reappointment is a personal freedom," he said, "It means the CRC has no particular interest whether the incumbent chairman challenges reappointment or not," and "Even if he challenges reappointment, it does not affect the evaluation at all." He emphasized that the interpretation that "personal freedom" implies the possibility of the chairman’s reappointment has "not even 0.1% of that emphasis."

Heejae Park, Chairman of the POSCO Holdings CEO Candidate Recommendation Committee. Photo by POSCO Group

Park said, "We will select a good CEO for the company and the country," adding, "We will seek the most outstanding person recommended internally, externally, and even globally from abroad." The CRC recently selected 10 domestic and international search firms (headhunting companies) to receive external candidate recommendations and has also started the candidate recommendation process from shareholders.

The POSCO Holdings board of directors passed the ‘New Governance Improvement Plan’ on the 19th of last month and presented five qualification criteria for chairman candidates: ▲Management capability ▲Industry expertise ▲Global competence ▲Leadership ▲Integration/Ethics. Park said, "These criteria were carefully considered through frequent discussions and expert consultations to maximize the company’s future and shareholder value," and "We plan to conduct evaluations with extensive discussions on these matters."

Park also explained the background of issuing the statement unusually at 1 a.m. He said, "After hearing the National Pension Service chairman’s remarks, we felt the need to immediately correct the misunderstanding, but since CRC members are all currently working in their respective positions, it was difficult to coordinate the timing," adding, "The earliest time when everyone could gather was late at night, so we held a meeting then and released the results."

The CRC plans to hold its 4th meeting on the 3rd. Park said, "I think the National Pension Service’s criticism is a call for us to do better," and "We will transparently communicate everything about the chairman selection process with external parties."

The CRC will continue to accept shareholder and search firm recommendations until the 8th. Each of the 10 selected search firms can recommend up to three candidates. Once external candidate recommendations are completed, the results will be compiled and a longlist of 20 to 30 internal and external candidates will be disclosed by mid-month. After internal screening, a shortlist will be created, and then compressed to a final list of about five candidates, with one final candidate confirmed by mid-February next year.