Yoon Kyoung-lim, the sole nominee to be KT Corp.’s next chief executive, has offered to resign, sending the selection committee of the top South Korean telecommunications giant’s new leader back to the drawing board for the second time in as many months.
His resignation signals growing political clout in corporate matters at the cost of Korea Inc.’s growth prospects, management independence and profitability, analysts said.
Yoon, president of the country’s largest fixed-line and mobile carrier, recently tendered his resignation as the CEO nominee, industry sources said on Thursday.
His resignation comes days before the company’s annual shareholders’ meeting on March 31, where his appointment was set to be voted on.
Yoon, chief of the conglomerate’s (Digital) Transformation Division, is known to have said during a meeting with directors that “If I stay, it will be a burden on KT. The company would be in a difficult situation.”
Earlier this month, KT’s board of directors chose Yoon, a telecom industry veteran who has also worked for Hyundai Motor Co., as the KT CEO candidate from a list of four bidders.
KT's headquarters in Seoul TWISTS AND TURNS
The process to pick a new KT leader has taken on a journey of twists and turns since December.
Ku Hyeon-mo, the incumbent CEO whose three-year term ends at the end of March, vowed to run for a second term in December and was later named the single candidate by KT’s board of directors.
But he dropped his reelection bid in February, succumbing to growing calls for enhanced corporate governance.
His thwarted bid followed weeks of strong requests by KT’s largest shareholder, the state-run National Pension Service (NPS), and Korean President Yoon Suk Yeol for the telecom company to fix its opaque process in choosing the next CEO.
Korean President Yoon and lawmakers of the ruling People Power Party have criticized the board’s choice of Ku, suggesting his second term could be likened to being “self-appointed.”
Under pressure, KT’s board of directors scrapped its decision and opened another bidding, where Yoon Kyoung-lim was selected.
Some ruling party lawmakers, however, overtly expressed their disapproval, calling the second nominee “Ku Hyeon-mo’s avatar.”
To make things worse for nominee Yoon, the executive has recently been placed under prosecutor investigation over his alleged role in the sale of a car software development startup to Hyundai Motor in 2021.
KT's current CEO Ku Hyeon-mo PROXY ADVISERS SUPPORT YOON
NPS, KT’s largest shareholder with a 10.35% stake, has also been calling for improved corporate governance at companies in which it has invested.
Seo Won-joo, the state-run pension fund’s new chief investment officer, said in December that the fund would strengthen its shareholder engagement, calling for enhanced transparency and fairness in CEO hiring processes at local companies, including KT and POSCO Holdings Inc., where there are no clear dominant shareholders.
KT’s second-largest shareholder, Hyundai Motor Group, which owns Hyundai Motor, Kia Corp. and auto parts maker Hyundai Mobis Co., has also expressed objections to Yoon Kyoung-lim’s ascent to the CEO post.
Meanwhile, proxy advisers Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. as well as two Seoul-based advisory bodies have urged investors to vote for Yoon Kyoung-lim at the March 31 annual general meeting.
“Even if he’s appointed as the next CEO, he would have an uncomfortable relationship with the government, which regulates the telecom industry,” said an industry official.
If the appointment of the new CEO is not made at the upcoming shareholders’ meeting, KT would be left without a top leader for several months.
KT was a state-owned enterprise for decades before it was privatized in 2002.
Every CEO in KT’s history has faced challenges with each government transition. Former CEO Nam Joong-soo and former Chairman Lee Suk-chae succeeded in their reelections but both resigned midterm.
Former Chairman Hwang Chang-kyu was the only one to complete a second term, but he faced a prosecution investigation.
