CEOs seen as living on borrowed time

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CEOs seen as living on borrowed time

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With only four months left in President Lee Myung-bak’s term, speculation is rife about what lies in store for the CEOs and executives of state-owned financial institutions and private financial firms.

At least two top posts will become vacant around the Dec. 19 election, according to industry insiders. CEOs of state-run financial institutions sit in the post for three-year terms.

The term of Jun Kwang-woo, CEO of the National Pension Service (NPS), is set to expire on Dec. 2 while Korea Exchange (KRX) CEO Kim Bong-soo is scheduled retire on Dec. 29.

Normally, the NPS would form a special committee to recommend a successor by putting the position up for an open competition, usually about two months before the seat becomes vacant. But such a committee has not been put together yet by either the NPS or KRX due to the looming deadline of the presidential election.

“Given that President Lee’s official term will end in February, he should in principle appoint successors to the two state-run financial institutions,” said an executive at NPS who asked not to be named. However, few candidates would choose to accept such a poisoned chalice as they could be removed within months once the seat of power changes hands, he added.

“Appointing successors under the Lee administration is useless unless their political views match those of the incoming government,” he said.

Possible solutions being bandied about include reappointing Jun on the provision that he voluntarily steps down one year later.

At the KRX, the vice president could end up serving as the acting CEO for a few months until the new administration takes office, according to officials at the state body.

According to some industry insiders, Lee has already set a bad precedent with some of his personnel appointments in the financial sector.

When he was sworn into office in February 2008, one of the first things Lee did was conduct a massive reshuffle of the financial sector, which sparked heavy criticism from opposition lawmakers and the media.

“Lee decided whether CEOs and executives appointed by his predecessor Roh Moo-hyun would get to keep their jobs by first receiving their letters of resignation,” said an executive at a financial holding company that runs one of Korea’s major banks.

“He accepted some of them regardless of how much time remained on their terms. There seemed to be no objective yardstick to explain his decision-making. Most were effectively forced to quit and replaced by Lee’s aides.”

A personnel reshuffle in the private financial sector is also imminent.

Of the 61 vice presidents at Korea’s five major banks-Woori Bank, Shinhan Bank, Hana Bank, KB Kookmin Bank and Korea Development Bank- 40 are set to retire around the end of the year. Bank chief executives have longer, until 2014 or 2015.

“Lee’s successor may very well conduct a massive reshuffle of executive positions in the financial sector as it is one of the quickest ways to usher in a smooth transition,” said an executive at one local bank.

Others called for an end to the practice.

“In the early days of the Lee administration, he was criticized for making so many ‘parachute’ appointments based on his personal, academic, religious or regional connections,” said an executive at another bank.

“Those who helped with his election campaign were handed key positions in government agencies and public corporations after CEOs were forced to resign. Lee’s successor must end this bad practice and guarantee that deserving executives get to see out their terms.”

By Kim Mi-ju [mijukim@joongang.co.kr]

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