Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Hanjin chief loses management post at Korean Air
Korean Air board chairman Woo Kee-hong puts down the gavel after announcing Hanjin Group Chairman Cho Yang-ho was stripped of his membership in the board and lost his CEO status during the carrier's annual shareholder meeting at its headquarters in Gangseo-gu, southwestern Seoul.
By Nam Hyun-woo
By Nam Hyun-woo
Hanjin Group Chairman Cho Yang-ho
Hanjin Group Chairman Cho Yang-ho has failed in his bid to be reappointed as an inside director of Korean Air, the group's core unit, losing management control. Cho, who took control of Korea's largest flagship carrier in 1999, has now become the first conglomerate owner in Korea to lose his CEO status due to the opposition of shareholders in a display of activism.
During the carrier's annual shareholder meeting, participants with 64.1 percent of voting shares approved Cho to serve another term, while 35.9 percent opposed. However, since Korean Air's articles of incorporation stipulate an inside director's appointment needs approval from two-third of voting shares, Cho's bid to maintain his grip on the air carrier was not approved. Shareholders holding 74.8 percent of the company's voting shares attended the meeting.
Cho's previous term expired earlier this month, and he did not attend the meeting.
Cho along with Hanjin KAL and his family members hold a combined 33.35 percent stake in Korean Air, the largest shareholders group. Hanjin KAL is Hanjin Group's de facto holding firm.
The National Pension Service (NPS) is the second biggest stakeholder with 11.56 percent, while the remainder are held by multiple minor shareholders.
Cho's ouster was largely attributable to opposition by the NPS. Citing Cho's alleged misuse of corporate money and problems with his family members behavior, including possible criminal activity, the state-run pension fund said Tuesday that Cho had a “record of undermining shareholder value” and it would vote against him.
Cho is currently 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.
The NPS decision was also a reflection of the damage done to Korean Air share prices by the Cho family's illicit behavior, including the infamous “nut rage” incident involving his daughter Heather Cho.
With the failure, Cho has lost his status as the CEO of Korean Air, 20 years after succeeding his father, Hanjin Group founder Cho Choong-hoon.
Since Hanjin KAL, which has a 29.96 percent stake in Korean Air, is still controlled by Cho Yang-ho, he is expected to maintain his chairmanship for the future, unless he is found guilty of embezzlement, and Hanjin KAL shareholders approve, during a shareholder meeting Friday, an NPS proposal to strip executive status from anybody in the group found guilty of a crime.
Following Cho's eviction from the board, Korean Air is expected to appoint his son, co-CEO Cho Won-tae, to head the firm. Korean Air has three co-CEOs: Cho Yang-ho, Cho Won-tae and Vice President Woo Kee-hong.
The junior Cho was appointed Korean Air co-CEO and president in January 2017.