Posco CEO Lee Ku-taek is likely to resign at the steelmaker's board meeting today, sources said yesterday. Lee's current three-year term of office expires in February 2010.
A POSCO official neither denied nor confirmed reports about impending resignation of Lee.
"There is no official decision made on his stance," the official said.
The Joongang Ilbo newspaper quoted an unnamed POSCO source as saying that Chairman Lee said he wanted to resign to ease the burden of the new government.
Lee took over POSCO in 2003 during the former Roh Moo-hyun administration. His three-year term was extended In February 2007.
Even though POSCO is a private firm, industry watchers says some government influence over management decisions remain from its state-owned days. With a shift in the political landscape due to the new conservative Lee Myung-bak government in 2008, the POSCO chairman might have felt pressure himself, they said. The steelmaker's recent failure to jointly acquire Daewoo Shipbuilding with GS Group might also have affected Lee's decision.
The report also reported that POSCO president Yoon Seok-man and its construction arm CEO Chung Joon-yang were strong candidates to replace Lee as head of the world's fourth-largest steelmaker.
If rumours that Lee's resignation is due to political pressure prove true, it would increase the uncertainty of the company's management, making shareholders uncomfortable, said Richard Kim, analyst with Korea Investment Securities Co.
Solidarity for Economic Reform, a local civic group, said "a change of POSCO chairman ahead of expiry of his term runs counter to (the government's) effort to improve public-turned private firm's governance," in a statement.
"The risk for the corporate governance can lead to downgrade of POSCO's brand value and exacerbation of the local steel industry's crisis," the NGO said.
Analysts expect that POSCO is likely to see disappointing earnings results for the fourth quarter of 2008, and that its business outlook will deteriorate in the first quarter of this year, due to the global recession.
POSCO's expected output cut of 370,000 tons of steel, a further decline in steel prices and the weakness of the won in December will hurt earnings for January, Kim said.
Recently, the company denied market rumors that it may post its first monthly deficit in January.
Kim said, however, POSCO was in a safer position than other steelmakers in terms of business outlook, because it can buffer shocks of the global recession due to a shortage of crude steel.
"Its production cut will be at 10 percent levels, smaller than others who have to cut 30 percent," Kim said.
Source: The Korea Herald
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