Hanjin Group chairman clings to control
Hanjin KAL CEO Suk Tae-soo speaks during the Hanjin Group holding firm's shareholder meeting in Jung-gu, Seoul, Friday. Yonhap
By Nam Hyun-woo
Hanjin Group Chairman Cho Yang-ho, ousted from the Korean Air board on Wednesday, has managed to keep control on the group after shareholders of de-facto holding firm Hanjin KAL on Friday rejected a proposal that could have stripped Cho of his board seat.
Hanjin KAL shareholders also approved the reappointment of Cho's close aide to the board, allowing the troubled aviation tycoon to cling to the group's management until next year's Hanjin KAL shareholder meeting.
During the Hanjin KAL annual general meeting, shareholders rejected a proposal to tighten the requirements of the firms' directors, stripping executive status from anybody in the group found guilty of a crime, following the opposition of 49.29 percent of attending shares.
The articles of incorporation state that such a proposal requires the approval of two-thirds of the attending shares. The meeting was attended by shareholders owning 77 percent of Hanjin KAL's total shares with voting rights.
A combined 28.93 percent stake in Hanjin KAL is held by Cho and his family members, followed by the activist fund Korea Corporate Governance Improvement (KCGI) with 10.81 percent and the National Pension Service (NPS) with 7.16 percent.
The NPS proposal could be a critical blow to Cho, who is on trial for allegedly receiving 19.6 billion won in unfair commissions from Korean Air suppliers through a paper company. Including other charges, he is suspected of embezzling 27 billion won.
Those charges, along with his family's misconduct ― including the “nut rage” by Cho's daughter, former Korean Air Vice President Heather Cho ― played a critical role in the NPS move to spearhead Cho's ouster from the Korean Air board at the carrier's shareholder meeting on Wednesday.
Hanjin KAL CEO Suk Tae-soo drinks water during the Hanjin Group holding firm's shareholder meeting in Jung-gu, Seoul, Friday. Yonhap
Also at Hanjin KAL shareholder meeting, shareholders approved the board's proposal to reappoint CEO Suk Tae-soo as an inside director, with a 65.46 percent approval rate.
Suk is known as one of Cho's closest associates, serving as Korean Air Vice Chairman and Hanjin KAL President. The No. 2 shareholder, KCGI, opposed Suk's reappointment, citing his unsuccessful decision to support now-defunct Hanjin Shipping, but the NPS approved Suk retaining his seat on the board.
Although Cho kept his grip on the group, industry analysts said this would be challenged again, because his term as a Hanjin KAL director would expire next March, and there would be a vote at next year's Hanjin KAL annual general meeting.
Korea's No. 2 carrier Asiana Airlines and its de-facto holding firm Kumho Industrial also had their respective shareholder meetings on Friday, but they wrapped that up quickly in a grim atmosphere, following Kumho Asiana Group Chairman Park Sam-koo's resignation from the group a day earlier.
Kumho Industrial was supposed to back Park's reappointment as an inside director, but canceled the motion following Park's decision to quit.
Park resigned as the group's chairman and from the boards of Kumho Industrial and Asiana Airlines, taking responsibility for the stock market chaos stemming from the companies' controversial audit reports.
The chairmen of both companies apologized at the shareholder meetings. Except for the canceled motion on Park's reappointment, shareholders approved the agenda as proposed.