KT has begun talks on a new slate of outside directors ahead of a shareholders meeting next month to approve Park Yun-young (박윤영) as its new chief executive.

The discussions are expected to be a watershed for KT’s governance direction, going beyond a simple board reshuffle to test the balance between CEO authority and the board’s oversight structure.

According to the industry on Sunday, KT’s board held a briefing session with inside and outside directors in attendance and discussed an agenda item on appointing new outside directors.

KT currently has 7 outside directors. The terms of three — Yanghee Choi (최양희), president of Hallym University, Jong-soo Yoon (윤종수), a former vice environment minister, and Young-kyun Ahn (안영균), a director at the International Federation of Accountants (IFAC) — expire in March. Including one vacancy left by former director Seung-a Cho (조승아), who stepped down amid controversy over a potential conflict of interest due to a concurrent outside director post at Hyundai Steel, KT needs to fill a total of 4 seats.

Under its articles of incorporation and the Commercial Act, KT must hold a regular shareholders meeting by the end of March to obtain shareholder approval for the appointment of Park as CEO candidate and for director appointments. Notice of the meeting must be given 2 weeks in advance, meaning the final list of director candidates must be decided by then.

Based on the discussions, KT’s board plans to hold another meeting as early as Feb. 10 to finalize recommendations for outside director candidates. Some skeptical views have emerged over whether such a tight timetable can be met.

The key point to watch in this board reshuffle is the scale of replacement.

As talk simultaneously swirls over whether directors whose terms are expiring will be reappointed and whether a sweeping replacement of outside directors is possible, the stance of the National Pension Service is seen as the biggest variable. The NPS recently changed its purpose for holding KT shares from “simple investment” to “general investment,” signaling a more active exercise of shareholder rights.

In particular, it was reported that in November last year the KT board concluded that a proposed rule revision requiring board approval for the CEO’s organizational reshuffle and executive appointments could undermine management rights, and issued an opposing view.

That has led to speculation that the chances of reappointing directors who supported the agenda item at the time could diminish. The KT board said the rule revision was a measure to ensure management stability, but it was also reported to be reviewing a plan to roll back the concept of approval to the level of “consultation,” mindful of internal and external criticism.

Attention is also on the future of four outside directors whose terms remain: Yong-heon Kim (김용헌), a lawyer at DaeRyukAjou Law Firm and board chair, Sung-chul Kim (김성철), a professor at Korea University’s Media School, Woo-young Kwak (곽우영), a former head of vehicle IT development at Hyundai Motor, and Seung-hoon Lee (이승훈), a managing partner and head of the global division at KCGI.

Given that they were at the center of last year’s controversy over “self reappointment,” there is a view that they could face pressure over alignment with the leadership of Young-sup Kim and how they set their relationship with the next management team.

Calls for resignations are also growing within KT. KT’s labor union said in a statement on Feb. 5 that the board’s operating methods should be overhauled and all current directors should resign. It demanded greater transparency in board operations and procedures, and the introduction of a board evaluation system.

KT Saenonojo, the second union, also issued a statement on Sunday, saying all responsibility for the current management vacuum and legal risks lies with the board, and urging it to abandon self reappointment.

Separately, the briefing session was also reported to have discussed allegations involving Lee over investment brokering and employment solicitation.

Lee is suspected of asking management for favors in key appointments and brokering an investment in German satellite communications firm “Rivada.”

[Yonhap News Agency]