Hanjin chief shot himself in the foot
Hanjin Chairman Cho Yang-ho was kicked out of the boardroom of the group’s flagship unit Korean Air on March 27 as shareholders voted against his re-appointment as director.
At their meeting, 64.09 percent of shareholders voted in favor of Cho’s re-appointment, which fell just short of the required approval of two-thirds.
The National Pension Service (NPS) played a significant role in the unprecedented move _ the world’s third-largest institutional investor officially opposed the re-election of the scandal-ridden tycoon.
The NPS, which manages more than $570 billion funds and invested some $100 billion in the Korean stock market, is the second-largest shareholder of Korean Air with a stake of 11.56 percent.
Claiming that Cho’s stay in the board “will undermine corporate value and infringe on shareholder rights,” the NPS spearheaded the exit of the 70-year-old businessman, who is on trial for allegedly embezzling about $18 million.
The NPS also tried to remove SK Group Chairman Chey Tae-won from the board of SK Holdings by iterating that his presence “will undermine corporate value and infringe on shareholder rights.”
Despite the opposition of the NPS, which holds an 8.4 percent stake on SK Holdings, Chey could keep his seat at the boardroom because the required approval was just a majority.
Aftermath of financial crisis?
Korean Air also had a similar requirement of a simple majority for the election of its directors but strengthened it to two-thirds in 1998 in order to safeguard its management from corporate raiders.
Back then, concerns surfaced on corporate raiders amid the Asian financial crisis. In particular, Hanjin prepared for the father-to-son power shift to Cho, who took charge of the conglomerate in 1999.
By taking the preemptive measure, however, observers point out that Hanjin fell into its own trap as Cho was forced off the board despite more than 60 percent of approval.