[Person人] Steel, a Dream Beyond... POSCO Chairman Choi Jeong-woo Transforms into Holding Company After 54 Years Since Founding

POSCO Chairman Choi Jeong-woo (second from the left in the front row) is demonstrating the extraction of underground brine at the lithium salt lake exploration site in Argentina in October 2019. Photo by POSCO

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[Asia Economy Reporter Donghoon Jeong] ‘Sucheojakju Ipcheogaejin (隨處作主 立處皆眞)’

This is the motto of Chairman Choi Jeong-woo, who led the biggest change of transitioning POSCO to a holding company system. It is an old saying meaning, ‘If you always live as the master of your mind in whatever you do, your life will be true.’ Whenever Chairman Choi stands before company members, from executives to field workers, he repeats this phrase. Through this holding company system, POSCO dreams of expanding its business areas beyond steel to eco-friendly future industries such as hydrogen, secondary batteries, and minerals. Chairman Choi’s motto also conveys a message emphasizing flexibility to work beyond the framework of the steel industry and POSCO’s future potential. He has stressed to executives, “(POSCO executives) must have a thorough sense of ownership and, under the paradigm of cooperation and equality, demonstrate leadership that benefits not only internal employees and stakeholders but also partners and local communities with consideration and respect.”

◆Shareholder-friendly gambit, surpassing POSCO’s biggest turning point= Amid industrial upheaval, the launch of the holding company ‘POSCO Holdings’ on the 2nd of next month is a scene where Chairman Choi’s gambit has succeeded. After the decision to transition to a holding company system, concerns about shareholder value dilution arose in many places, but it was overcome with shareholder-friendly policies. Last month, Chairman Choi announced in a shareholder letter that treasury shares would be canceled and a minimum dividend of 10,000 KRW would be paid. In fact, POSCO’s dividend per share for the last fiscal year reached 17,000 KRW. Under Chairman Choi’s judgment that there is no future without change during industrial restructuring, he actively persuaded shareholders. The National Pension Service and major overseas proxy advisory firms expressed support, and the voting direction of minority shareholders also changed. At the POSCO extraordinary general meeting on the 28th of last month, the transition to a holding company system was approved with 89.2% of the votes.

Chairman Choi explained the background of the holding company system decision, saying, “I judged that innovation in the management system is urgently needed to actively respond to the anticipated revolutionary environmental changes and to sustain company growth. The global low-carbon transition is fundamentally shaking the competitiveness of existing industries including steel. POSCO, at the center of change, will be able to increase corporate value further through the holding company system.”

Choi Jung-woo, Chairman of POSCO, visiting the site of Pohang Steelworks Blast Furnace No. 2 shortly after his inauguration in 2018. Photo by POSCO

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◆Mountain village boy dreams of becoming ‘Chairman’= Chairman Choi is from a small rural village in Guman-myeon, Goseong-gun, Gyeongnam Province. During middle school at Hoihwa, he had to walk 6 km every day to school, and though he was small and had never eaten his fill due to poverty, he never missed being first in his class. After graduating from Pusan National University and joining POSCO as a new employee, he habitually told his peers, “I will become chairman.” Eventually, in July 2018, he became the 9th chairman of POSCO. Although he was often labeled as a ‘non-engineer’ and ‘non-Seoul National University graduate,’ he understood the roots of the steel industry better than anyone by gaining experience in accounting, cost management, audit analysis, and auditing. He joined POSCO in 1983, served as CFO, then in 2008 was head of management strategy at POSCO Engineering & Construction. In 2014, he was head of planning and finance at Daewoo International (now POSCO International), and in 2018, CEO of POSCO Chemtech (now POSCO Chemical), which operates in the secondary battery materials business. Having experience in steel, construction, trading, and future new businesses such as secondary batteries, he is regarded as the right person to open the ‘POSCO 2.0’ era.

◆Corporate value triples... POSCO Group enters the 100 trillion KRW era= From the beginning of his tenure, Chairman Choi emphasized a responsibility management system led by division heads rather than direct intervention. Before his appointment, he stressed, “Based on 50 years of success, it is time to leap forward as a genuine 100-year company,” and “A different mindset and belief are needed from now on.” After emphasizing responsibility management in non-steel business sectors such as energy and secondary batteries, POSCO Group recorded its best-ever performance last year, three years later.

Chairman Choi expressed his ambition to increase corporate value through POSCO’s transition to a holding company system. He said, “Despite record-breaking management performance last year, POSCO’s market capitalization is less than half of its peak in 2007,” and “With the transition to a holding company system, balanced growth between steel and new businesses will accelerate, and the business identity as an eco-friendly future materials company will expand, so growth efforts will be properly reflected in corporate value.” POSCO Group currently estimates that its corporate value, at about 43 trillion KRW, will more than triple with the transition to a holding company system. To this end, it plans to accelerate growth strategies centered on seven core businesses.

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