POSCO Annual Report

Jeffrey D. Jones
Attorney at Law Kim & Chang

"It's a distinct honor to be elected to the POSCO Board of Directors. In the two decades since I began practicing law in Korea in 1980, I've seen Korean businesses undergo a remarkable transformation that has seen many of them become global powers in their industries. Today, they're also paying increasing attention to good governance. As an outside director and member of the Audit and Insider Trading Committees, I look forward to helping POSCO measure up to its commitment to timely and fair disclosure in the years ahead."

Employees can also seek guidance from department heads or ethics leaders, or directly phone or e-mail their questions or violation reports to the department.

With the introduction of the new code, we also embarked on an aggressive training and PR program to build consensus for our goal of ethical excellence. Early on, we conducted two company-wide workshops that played a key role in fostering awareness and active participation. We consistently promoted the new code through the company newspaper, intranet, and website. We selected and trained ethics leaders in each division and department to mentor their colleagues. We also made corporate ethics an integral part of many of our training programs, including new employee orientations. An online corporate ethics course is now available on-demand via the POSCO e-learning system, enabling employees to challenge and measure their ethical awareness and sensitivity.

Perhaps the most crucial and difficult challenge in adopting the new code was enlisting the support of our business partners. CEO Ku-Taek Lee sent letters to each of our affiliates, customers, suppliers, and partners explaining the new code and requesting their cooperation in abiding by it. We also followed up the letters with orientation meetings to avoid misunderstandings about the new standards, particularly our strict prohibition of traditional gift giving and receiving practices associated with major holidays, to avoid all appearances of improper influence in our business relationships.

Cultivating Credibility
In 2003, we put a lot of effort into upgrading the supporting infrastructure and quality of our investor services. On the infrastructure side, we created a database with key information on major fund managers, analysts, and potential investors. On the quality side, we began actively utilizing our corporate knowledge management system and data warehouse as a communications resource as we applied Six Sigma methods to improve service quality, resulting in more timely and accurate business information for both analysts and investors.

Starting with Seoul in January, we held our annual CEO Investor Forum meetings in five key financial markets to review our 2002 corporate performance and preview our 2003 plans and prospects. Our busy year on the road also saw us participate in eight major investor conferences as well as hold over 250 one-on-one meetings with fund managers and buy- and sell-side analysts.

Stock retirement
In October 2003, we continued to increase shareholder value by repurchasing and retiring treasury shares for the third straight year. This time, we repurchased and retired 2% of the total issued and outstanding shares?1,815,640 shares valued at KRW 253.4 billion?reducing outstanding shares to 88,966,155 while boosting earnings per share by 2.04%. Given the dividend effect of share retirements, it is our ongoing policy to coordinate our dividend and share retirement policies to maximize the shareholder benefit.

At year-end, we held a total of 7,346,200 treasury shares, excluding 912,010 shares held in a monetary trust fund. In addition to treasury shares repurchased directly on the open market, we indirectly acquired shares in accordance with the trust fund. We also extended a KRW 100 billion monetary trust operated in conjunction with the fund for an additional year at the time of maturity in November 2003.