Chairman Cho may have to face proxy war: watchers
Hanjin Group Chairman Cho Won-tae might have to struggle to maintain his leadership over Korea’s 13th-largest conglomerate in the face of challenges from major shareholders, including his own family.
Chairman Cho reportedly visited his mother’s house in Seoul on Christmas to argue over his elder sister, Cho Hyun-ah, who overtly criticized him for not to abide by their father’s will.
Chairman Cho argued with his mother, Lee Myung-hee, to eventually break a vase and a window into pieces after wielding a fireplace poker, according to many local media outlets.
Against this backdrop, observers expect that Lee may side with Cho Hyun-ah in the potential proxy war with Cho Won-tae in time with the annual shareholders’ meeting next March.
“Cho Hyun-ah made it clear that she was not content with Cho Won-tae’s stewardship. And now his mother also seems not to underpin his son,” said Park Ju-gun, head of research firm CEO Score.
“In consideration of relative small direct shareholding of Cho Won-tae, the lack of supports from his family members would pose a threat to his chairmanship. His greed leads to grief.”
Currently, Cho Won-tae controls 6.52 percent of Hanjin Kal, the holding company of Hanjin Group. His two sisters of Cho Hyun-ah and Cho Hyun-min own 6.49 percent and 6.47 percent, apiece.
Lee Myun-hee also owns 5.31 percent.
Included in other major shareholders are Korea Corporate Governance Improvement (KCGI) and Delta Air Lines, whose stakes are 17.29 percent and 10 percent, respectively.
The former is a local activist fund, which has urged Hanjin to improve its governance structure while the latter is a U.S. airline, which is expected to buttress Chairman Cho’s leadership.
“For now, Delta is believed to be a close friend of Chairman Cho. But who knows? It might side with any other players during the shareholders’ meeting next March,” Park said.
The late Hanjin Chairman Cho Yang-ho died this April leaving wishes for harmonious management among his three siblings. Instantly after his funeral, Cho Won-tae took the realm of the group whose iconic subsidiary is the country’s flag carrier Korean Air.
Earlier this week, Cho Hyun-ah published an announcement taking issue with Chairman Cho’s management style of excluding her in making significant decisions of the group, which she said is against his father’s instructions.