South Korean telecommunications giant KT Corp. is in shambles due to an unprecedented leadership vacuum, with not only its chief executive, but also almost all of its board members stepping down amid speculations of revolving door appointments.
Just before the start of this year's regular shareholders meeting on Friday, KT's three outside board members -- Kang Chung-gu, Pyo Hyun-myung and Yeo Eun-jung -- announced their resignations, leaving the board in almost complete vacancy. Kim Yong-hun, a former secretary general at the Constitutional Court of Korea, remains as the only board member as of Friday.
Following the announcement of their intentions to resign, the agenda of their reappointment as board members was dropped from the meeting.
Leading the regular shareholders meeting, which was held at KT R&D Center in Seoul, the telecommunications giant's acting CEO Park Jong-ook said the company is working to "normalize" its governance structure and management.
“I will make sure that company operation runs smoothly, with the emergency management committee in the lead,” Park said, mentioning a Korean idiom equivalent to “after a storm comes a calm.”
“At the same time, I will do my best for speedy normalization of business management by improving corporate governance and taking opinions from diverse stakeholders.”
The resignation announcements of the three board members came after the National Pension Service, the state-run pension fund and the company's largest shareholder, voiced opposition to the two of the board members on Thursday.
The three board members who have announced to step down, however, are expected to serve until their successors are appointed, in accordance with the commercial law.
The country's second-largest wireless carrier, which was a public company more than two decades ago, continues to suffer from political pressure on its leadership appointments.
Former CEO Ku Hyeon-mo gave up his second term after the NPS stood against his nomination without open competition.
Then, just recently the board had designated Yun Kyung-lim, head of the business transformation division, as the final nominee, after conducting another round of nomination process. But Yun also offered to resign just a couple of days before the shareholders meeting.
Ku resigned earlier than the official end of his term, on Tuesday, and the acting CEO Park came to temporarily fill in the void as the company put itself in emergency management.
“Upon the request to prevent ‘revolving door’ appointments, we are currently working on launching a task force to establish a new governance structure,” Park said during the shareholders meeting.
KT’s emergency management committee plans to restart the CEO nomination process, which it said would take about five months to be completed. But industry watchers predict the leadership vacuum will likely last throughout the year.
At the shareholders meeting, the four agenda items, including approval of the company’s financial statement, setting the limit for remuneration of executives and making changes in the articles of association, all passed as drafted. KT also added equipment rental business as a new business aim.
Some shareholders were seen shouting at the venue, outraged over the CEO nomination process and the plunge in share prices.
The telecommunications firm logged record sales of 25.6 trillion won ($20 billion) last year, hitting the 25 trillion mark for the first time since its listing in 1998. Operating profits also exceeded 1.6 trillion won for the second consecutive year.
However, its struggle with the CEO appointment process appears to be directly affecting shareholders. The company's share price tumbled almost 14 percent since December.