POSCO Struggling Ahead of the General Shareholders' Meeting

Chairman Choi Jung-woo's Reappointment Sparks Controversy
Participation Solidarity and Metalworkers' Union File Prosecution Complaints
Political Circles Also Demand Resignation
Intensifying Pressure on Private Companies

On the 22nd of last month, Choi Jung-woo, Chairman of POSCO, attended the National Assembly Environment and Labor Committee's industrial accident hearing and responded to lawmakers' questions. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Choi Dae-yeol] The internal and external pressures targeting POSCO are intensifying. The final decision on the reappointment of current Chairman Choi Jung-woo will be made at the shareholders' meeting on the 12th, and these movements are closely related to it. The political sphere has openly demanded that he step down from the chairman position.

On the 9th, the People's Solidarity for Participatory Democracy and the Metal Workers' Union filed a complaint with the Seoul Central District Prosecutors' Office against Chairman Choi and 64 POSCO executives for violating the Capital Markets Act. The allegation is based on the logic that company executives purchased treasury shares in mid to late March last year and then decided on a 1 trillion won treasury stock acquisition trust contract at the board meeting the following month, using undisclosed information.

The business community points out that this is a 'political event'-type accusation that did not consider the stock market situation at the time. At the beginning of last year, POSCO's stock price was in the mid-200,000 won range but steadily declined to the 130,000 won range by early in the year. This was largely due to the global stock market crash caused by the COVID-19 pandemic and the sharp drop in steel demand due to COVID-19. Accordingly, not only POSCO but also major conglomerates were in a situation where executives were consecutively purchasing their company's shares to show their commitment to stock price support and responsible management.

When Rep. Roh Woong-rae of the Democratic Party raised this issue at the National Assembly's Environment and Labor Committee industrial accident hearing held on the 22nd of last month, Chairman Choi responded, "As major domestic companies saw their stock prices plummet due to the (COVID-19) pandemic, they expressed their commitment to responsible management, and executives of other companies also purchased their own company’s shares," reflecting this background.

Within the industry, there is an interpretation that the consecutive participation of civic groups and labor unions in shaking POSCO following the political sphere is a move to block Chairman Choi's reappointment. Chairman Choi, who took office in July 2018, has a term that lasts until before this month's shareholders' meeting. In December last year, the CEO Candidate Recommendation Committee of the board unanimously recommended him as the next chairman candidate, and the final decision on his reappointment will be made at this shareholders' meeting. Although POSCO was privatized after the government sold its shares to the company since 2000, allegations of personnel interference have persisted. This is because previous chairmen have stepped down before completing their terms after a new government took office. The previous Chairman Kwon Oh-joon was appointed during the Park Geun-hye administration, served a three-year term, was reappointed once, but stepped down before completing half of his term under the Moon Jae-in administration.

According to POSCO, after deciding on the treasury stock purchase trust contract in April last year, actual purchases began around mid-May, about a month later. The purchase price at that time was less than 180,000 won, and the stock price fluctuated very little during the month until the purchase date. Meanwhile, the KOSPI index rose about 4% during this period. A POSCO official said, "From early March last year, executives voluntarily purchased company shares to defend against the stock price plunge caused by COVID-19 and to practice responsible management, and not a single executive realized profits by selling these shares," adding, "We strictly comply with internal regulations, including Article 172 of the Capital Markets Act, which requires the company to recover profits if executives trade treasury shares within six months."

This content was produced with the assistance of AI translation services.