Cho Yang-ho ousted from Korean Air's board

Hanjin Group Chairman Cho Yang-ho

By Park Si-soo

Hanjin Group Chairman Cho Yang-ho lost his board seat at Korean Air after shareholders voted down the airline’s motion to reappointment him as an internal director on Wednesday.

According to reports, 64.1 percent of Korean Air Lines shareholders voted for Cho’s reappointment. But this fell short of the threshold of two-thirds of attending shareholders to keep him as a director for another three years -- 35.9 percent of shareholders voted against his reappointment.

It was the first time shareholders have voted to strip the company’s chief of a board seat. Cho, 70, has governed Korean Air since 1999.

A Korean Air spokesman confirmed the chairman’s board seat loss but it does not mean he has lost the airline’s chairmanship and managerial rights.

“Cho will remain as Korean Air’s chairman even though he has lost his seat as a director of the board,” the spokesman told The Korea Times. “His decisions will remain effective, except for issues that require permission of board members.”

The appointment of board members and decisions on major investments are among issues that require board approval.

His removal was widely expected because the National Pension Service (NPS), the second-biggest shareholder in Korean Air, on Tuesday said it would vote against Cho's reappointment.

The NPS is the world's third-largest institutional investor and manages 644 trillion won ($576 billion) of assets.

The pension service cited Cho's record of “hurting the corporate value and rights of shareholders” as the reason for its decision.

The Cho family has been under scrutiny in recent years after being embroiled in multiple criminal probes over charges ranging from assault and embezzlement to smuggling luxury goods.

Cho is on trial for allegedly embezzling more than 20 billion won ($18 million) and unfairly awarding contracts to companies controlled by his family members.

His two daughters, who held management positions at Korean Air, became online viral sensations for temper tantrums dubbed the "nut rage" and "water rage" scandals, forcing Cho to issue a public apology and remove them from their posts.

The elder, Cho Hyun-ah, made global headlines in 2014 for kicking a cabin crew chief off a Korean Air plane after she was served macadamia nuts in a bag rather than a bowl. She later served a short prison sentence.

Last year, her younger sister, Cho Hyun-min, was accused of throwing a drink into an advertising agency manager's face in a fit of rage during a business meeting. She was not indicted as the victim did not want to press charges.

Their mother, Lee Myung-hee, has been questioned by police several times over allegations of assault against her employees, including cursing, kicking, slapping and even throwing a pair of scissors.

Cho received a suspended jail sentence for tax evasion in 2000 and is awaiting a separate trial for allegedly using 30 billion won of company funds to renovate his house.

In July 2018, the NPS said it would adopt the stewardship code, a set of principles or guidelines aimed at getting institutional investors to engage in corporate governance to advance the interests of shareholders.