Sibling war over Hankook Tire's control remains unsolved

By Baek Byung-yeul

The sibling war in Korea's largest tire giant Hankook & Company between Vice Chairman Cho Hyun-sik and his younger brother and President Cho Hyun-bum has become more complicated, as each one took their own victory in shareholders' meetings, Tuesday.

Formerly called Hankook Tire & Technology Group, Hankook & Company is the holding company of the tire giant supervising the group's flagship unit Hankook Tire & Technology and other affiliates.

The sibling war in Korea's largest tiremaker come as the brothers have been battling over management control of the group.

Currently, Cho Hyun-bum, which also serves as CEO of Hankook Tire & Technology, holds a 42.9 percent stake in Hankook & Company, while his older brother holds a 19.32 percent and their two sisters Hee-won and Hee-kyung have 10.82 percent and 0.83 percent stakes, respectively. The National Pension Service has a 5.21 percent stake.

Given Cho Hyun-bum holds the largest stake in the holding company, he was eligible for taking control of the group, but his older brother could seize it away from him thanks to the revised Commercial Act.

In December 2020, the National Assembly revised the Commercial Act that requires listed companies to name at least one outside auditor and limits the voting powers of the biggest shareholders and their families to 3 percent in the auditor's appointment.

Due to the so-called 3 percent rule, the sibling battle of the tire giant has become a proxy battle, in which a group of company shareholders is joining forces in an attempt to oppose the current management.

At the shareholders' meeting of Hankook Tire & Technology held on Tuesday morning, shareholders sided with the younger Cho's plan, which is appointing Lee Mi-ra, chief human resources officer at GE Korea, as an outside director of Hankook Tire & Technology as the auditor gained an 84 percent vote from shareholders. Cho Hyun-bum was also re-appointed as a registered director.

Against the younger Cho, the elder Cho and his sister Hee-kyung, head of Hankook Tire Foundation, gathered votes to appoint BRB Korea Advisers CEO Lee Hye-woong as an outside director, but Lee received only 16 percent of the votes.

However, the older Cho took advantage of the 3 percent rule in the shareholders' meeting of Hankook & Company, held on Tuesday afternoon.

At that event, the elder Cho fielded Korea University professor Lee Han-sang as an outside director and auditor, who beat the younger brother's recommendation of Kim Hye-kyung, an Ewha Womans University professor.