Lawmakers are putting pressure on companies that have a “dispersed” ownership structure, particularly financial companies and some former state-owned companies, providing support to the government’s move to hold executives at these entities accountable for their decisions.

During a meeting held by the People Power Party at the National Assembly Thursday, the ruling party’s lawmakers shared criticism of ownership structures at some companies.

“Companies should not allow their executives to take advantage of the ownership structure to solidify their positions, especially those among former state-owned companies like KT Corp. and POSCO, nor at financial holdings groups,” said the party’s lawmaker Kim Sang-hoon.

The ruling party’s pressure comes after President Yoon Suk-yeol’s comments about corporate ownership structures. During a government meeting on Jan. 30, Yoon said there needs to be changes in companies that don’t have owners, such as privatized companies and financial holding firms.

Pointing out that large financial companies and former state-owned companies do not have large shareholders that can hold executives accountable for their decisions, the lawmaker criticized particularly executives seeking longer terms, leaving their companies behind in terms of innovation.

The ruling party lawmakers further expanded their targets to include companies in certain key national industries, such as telecommunication networks and steel. While financial institutions have faced criticism for their supposedly excessive profit-seeking during times of high interest rates, companies in certain key national industries have come under public criticism for incompetent risk mismanagement.



“Financial hazards, like the Lime Asset Management case, did not hold the financial sector accountable,” Kim said. “KT has been suspected of ties with politicians. POSCO seems to be more interested in extending the chief executive officer’s term rather than addressing some of the criticism it’s been facing. Those companies need transparent management structures and maybe some outside influence.”

The ruling party has already started to move toward revising ownership structures. On Jan. 30, the party organized a conference to hear from experts and relevant authorities concerning ownership structures.

“There has been criticism about the recent approval to allow KT CEO Koo Hyun-mo serve another for another term,” lawmaker Kim Yeung-shik said. “It will be inevitable the government will be criticized in the near future, but it is more critical to facilitate the National Pension Service’s stewardship code.”

A stewardship code is a measure to encourage institutional investors to engage further in the decision-making process of companies to help the companies with their sustainable growth and management.

The ruling party is ready to provide all required legislative support as the government reviews an amendment to the Korea Stewardship Code.

The opposition party, as well, is moving in a similar direction. Democratic Party of Korea lawmakers are also having discussions on revising the appointment procedure at financial holdings groups as their presidents have been “self-appointed,” an act often criticized as being like an emperor clenching onto power.

By Lee Ji-yong and Chang Iou-chung

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]