POSCO has tapped Kwon Oh-joon to serve another three-year term as its chairman and CEO. The steelmaker’s board at its meeting on Jan. 25 agreed to retain him for another term. His nomination will become official after it gains approval at a shareholder meeting on March 14.
He succeeded Chung Joon-yang who resigned as the CEO in November 2014 after a drop in earnings.
POSCO, the world's fifth-largest steelmaker, had been struggling from a sharp decline in steel prices over the past two years because of a supply glut. But Chairman Kwon has been able to put the steelmaker back on the road to recovery when he took over as the top manager three years ago.
First up, he has to win the support from the next administration that will take over from the current administration when the next president takes office sometime this year. POSCO has no clear-cut majority shareholder, and therefore the chairman allegedly has to have the support of Cheongwadae, the Presidential Mansion, to keep his job.
On Jan. 9th, CEO Kwon announced his intention to serve one more year, and in reaction to that, POSCO's board of directors formed a CEO Candidate Recommendation Committee comprising of the company's six outside directors. The group conducted a qualification review of Kwon as the company's next CEO.
The chairman has his work cut out for him after he begins his new term.
He will have to start by removing the fall-out from POSCO’s involvement with the Choi Soon-sil scandal alleging that POSCO executives tried to help the Choi Soon-sil side gain control of an ad agency affiliated with the steel maker. The chairman also has to deal with heavy tariff rates on imported steel products by the U.S.
He also has to take care of a number of POSCO Group affiliates, which aren’t doing well operatonally.
The chairman will also have to help the steel maker find new growth engines, including electric car development.
Finally, he has to position the steel maker so it can be in the right place to benefit from the 4th Revolution.
The chairman led the latest annual personnel shake-up involving all of the affiliates of the group, including POSCO and its key affiliates such as POSCO Construction.
Following his nomination, Kwon called for the non-steel affiliates operations to be strengthened, including POSCO Construction and POSCO Energy, which have been losing money in the past several years. The committee members evaluated CEO Kwon as having greatly contributed to improving the company's corporate structure through extensive restructuring after his inauguration, as well as improving the company's profitability and the competitiveness of the Korean steel industry itself.
In fact, POSCO's operating profit increased by 19 percent to 2.6 trillion won at the end of last year from 2.2 trillion won in 2013, which was just before the CEO's inauguration, and its operating margin also recovered to a double-digit figure, from 7.3 percent to 10.8 percent.
The CEO received positive evaluations for the company's record-low debt ratio of 17.4 percent as of the end of last year and largest ever global sales volume of premium products, as well as 126 instances of restructuring after his inauguration, and a 55 percent rise in the company's stock price.
Kwon studied metallurgical engineering at Seoul National University and received a doctorate from the University of Pittsburgh. Since joining POSCO in 1986, he has mostly led research-and-development projects at the steelmaker.
Berkshire Hathaway Inc. holds a stake of about 5 percent in Posco.
POSCO scored the highest points among Korean companies by finishing in 35th on a list of the "Global 100 Most Sustainable Corporations in 2017," rising by five notches from the previous year in the World Economic Forum that was held in Switzerland on Jan. 17.
POSCO made the top 100 for the third consecutive year and was the only steel company in the world to do so.