[NEWS IN FOCUS] Vacuum emerges at KT as another CEO nominee resigns

KT's office in Gwanghwamun, central Seoul [JOONGANG PHOTO]

KT, Korea's leading telecommunication operator, is in turmoil as the company will be without a CEO for at least the coming months due to tensions with the government and shareholders.

The vacancy will likely continue through the year's first half, given that the nomination process typically requires three to four months.

Latest CEO nominee Yun Kyung-lim, president of KT's Group Transformation division, stepped down from the candidacy on Monday, following opposition from the government and major shareholders like the state-run National Pension Service (NPS) and Hyundai Motor.

The Korean telecom giant initiated the nominee selection process at the end of last year, but the nominees failed to find their way into an annual general meeting set for March 31. Incumbent CEO Ku Hyeon-mo's term will end on March 31, and KT has not decided on his replacement.

With Yun being the second candidate to step down, the recurrent resignations are linked to an entrenched problem of many formerly government-owned companies: a lack of independence from political whirlwinds.

The Korean government has intervened in CEO appointments for formerly public corporations like KT, KT&G and Posco, primarily to strengthen its clout.

"The KT CEO post is considered one of the most coveted in the political sphere because of its large scale," a source at KT&G, a tobacco company privatized in 2002, said. KT&G is not related to KT.

"It may seem like a single post, but KT has nearly 100 subsidiaries, affiliates and regional branches, and the CEO can have their say over management and personnel decisions at all of them, which makes it a very influential position," the source said, referring to the expansive web of KT companies totaling 51, according to the Fair Trade Commission.

Given the company's history, KT CEOs have changed as politics shift. The current CEO took over the company during the former Moon Jae-in administration.

President Yoon Suk Yeol and People Power Party lawmakers took shots at KT for selecting candidates for the CEO position exclusively from its own backyard "to maintain their cartel."

The largest shareholder NPS and second largest Hyundai Motor also expressed concern about picking candidates from inside, pointing to the partiality of board members.

Two KT board members prematurely resigned during the nomination process without specifying reasons. But the media reports speculate that the departures were due to political pressure.

Even if the company begins the new process as early as this month, the leadership vacuum will last through the second quarter.

"It is evident that KT will suffer a leadership vacuum throughout the first half," Ahn Jae-min, an analyst at NH Investment & Securities, said.

"As the CEO nominee steps down one week ahead of the shareholder meeting, KT will be without a CEO for at least three months to six months, which creates uncertainties in management," the analyst, who lowered the target price of KT stock to 38,000 won from 50,000 won, said.

KT share prices have constantly slid since the leadership issue emerged. It closed at 30,200 won Monday, up 0.83 percent but down 7 percent compared to the beginning of this year.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]