POSCO Group, owner of South Korea’s biggest steel mill, may face a delay in the appointment of the new chairman for its holdings company, following concerns raised by the National Pension Service (NPS), its largest shareholder, about the election process.

“As in the case of KT Corp., POSCO Holdings Inc. has a dispersed ownership structure,” Kim Tae-hyun, chief executive officer of the NPS, told Maeil Business Newspaper on Thursday. “A representative appointment process for such a company must grant fair opportunities to all candidates, whether from within or outside the company, to maximize shareholder benefits.”

The NPS CEO emphasized “channels for shareholder opinions to be reflected throughout the entire process.”

Kim’s remarks are believed to target POSCO Holdings’ recent corporate governance changes.

The steelmaker recently formed a CEO candidate recommendation committee, composed of seven outside directors. The committee automatically included the incumbent chair in the first candidate pool without a public position opening process, raising controversy.

“The process of appointing the chairman should be carried out openly according to fair and transparent criteria and procedures,” Kim said, noting that POSCO Holdings’ system lacks substantial competition.

“Whether the committee, composed only of outside directors, can sufficiently represent fairness and shareholder interests, will be assessed by shareholders, investors, and the market,” he said.

Although POSCO Holdings abolished its system that used to give the incumbent a review for an extension preceding other candidates aiming at preventing external influence, Kim believes that the new system rather hinders effective competition.

Kim turned to KT as a good precedent that POSCO Holdings could consider, particularly the listing procedures such as “direct public recruitment of CEO candidates, an external expert-centered appointment advisory system for candidate selection, and a CEO candidate recommendation through a committee centered on newly appointed outside directors.”

POSCO Holdings’ chairman election process, in the meantime, is likely to return to square one.

If the steelmaker reorganizes the CEO candidate recommendation committee to exclude outside directors that can be influenced by the incumbent chair and enable substantive competition, observers say that the next chairman may not be elected until the shareholders’ meeting in March 2024.

By Cha Chang-hee, Lee Yoon-sik, and Chang Iou-chung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]