[Initial Moment] Let's End the Misfortunes of POSCO

Choi Jung-woo, chairman of POSCO Group, has retired. He is the first CEO in POSCO Group's history to complete his full term. After working as a 'POSCO man' for 41 years, this is the last mark he left behind. However, his beginning was quite different from the present. Chairman Choi took office in 2018 during the Moon Jae-in administration, and he was not a leading candidate during the selection process at that time.

Former POSCO President Kim Joon-sik had secured a strong position early on, known as a childhood friend of Jang Ha-sung, former Blue House Policy Chief. Jang In-hwa and Oh In-hwan, who were POSCO presidents, were also noted as contenders, being part of the 'Kwon Oh-joon line.' Among outsiders, former SK Innovation Vice Chairman Koo Ja-young, who was strongly backed by a high-ranking official, was rumored to be a candidate. However, all of them failed to become the final choice.

POSCO Building, Yeoksam-dong, Gangnam-gu, Seoul. Photo by Younghan Heo younghan@

When Chairman Choi, a non-engineer who neither graduated from Seoul National University nor majored in metallurgical engineering, was selected as the final candidate, public opinion was as follows: "The final candidate was chosen as someone free from external pressure from the political sphere, independent from the influence of previous chairmen, and free from the specific hierarchical culture represented by Seoul National University's Department of Metallurgical Engineering."

When the administration changed, Chairman Choi was soon labeled as a 'person of the previous government.' After President Yoon Suk-yeol took office, he was unable to accompany any overseas trips, sparking controversy over being 'passed over.' While pushing for a holding company transition, he even turned local public opinion against him. Rumors circulated from early in the administration that Chairman Choi would be replaced in Yongsan.

What should we learn from past events? Looking into the controversies surrounding POSCO's governance structure, the problems inherent in widely held ownership companies become clear.

Widely held ownership companies mostly grew in monopolistic sectors such as steel, telecommunications, and tobacco, where in-group exclusivity is rampant. Due to limited external competition and lack of checks and balances, they have become 'their own league.'

For example, at POSCO, employees working in the steel division overwhelmingly constitute the majority. Their opinions become POSCO's opinions. When dissatisfaction with management arises by comparing wages and treatment to those in newly entered businesses, it quickly becomes the majority view.

Maintaining a long-term monopoly structure strengthens internal cohesion as well as ties with partner companies. Since supply transactions are at stake, partner companies openly engage in lobbying battles, influencing company opinion. The influence of local organizations and political circles is cited as a reason why the 'maze of intrigue' repeats every time the chairman is replaced.

An industry insider said, "The decisive moment when Chairman Choi lost trust from the local community was the launch of the maintenance subsidiary last year," adding, "Partner companies and local communities can only support candidates who can improve relations with them."

Even if a new CEO takes office and strongly innovates internally, a vicious cycle repeats where a new system is built centered around the CEO with overwhelming authority. Outside directors, who are supposed to check and monitor management, have not escaped controversy over 'trench building.' Criticism has been raised that CEOs and outside directors collude to dig trenches and 'self-renew' their terms, and allegations of extravagant overseas trips have shaken the fairness of the outside director system.

At the POSCO Holdings shareholders' meeting scheduled for the 21st, barring any major surprises, a new chairman is expected to be appointed. Although widely held ownership companies clearly have the limitation of lacking a true owner, it is hoped that by strengthening independent board-centered management, POSCO will no longer be shaken by 'shaking.' It is time to put an end to the repeated ordeals.

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