Shareholders vote against Cho’s re-appointment
Scandal-hit Hanjin Group Chairman Cho Yang-ho was forced off the boardroom of the group’s iconic subsidiary Korean Air as the company’s shareholders voted against his re-appointment as director on March 27.
In a proxy war involving Cho and the National Pension Service, the world’s No. 3 institutional investor, the former got 64.09 percent of the votes, which fell just short of 66.7 percent needed to ensure his re-election.
Cho controls about 30 percent of Korean Air via its parent company while the National Pension Service is the firm’s second-largest shareholder with an 11.56 percent stake.
It marks back-to-back setbacks for the 70-year-old tycoon, who has led the Seoul-based company over the past two decades _ he and his wife as well as his daughter face criminal charges ranging from embezzlement and smuggling luxury goods. Patriarch Cho is on trial for allegedly embezzling more than $18 million.
In this climate, the National Pension Service opposed Cho’s re-election, citing his negative track records of undermining corporate value and infringing on shareholder rights.
Although Cho lost his seat at the board, observers point out that he might continue to flex his muscle in the management of Korean Air.
First of all, his shares in Korean Air remain intact, and his son Cho Won-tae is leading the firm as CEO.
Of note is who will head preparation of the International Air Transport Association meeting, which will take place in Seoul this June for the first time.
Chairman Cho was supposed to take the role in line with the annual gathering’s traditions _ the head of the host company takes charge of its chairmanship.
Although Korean Air seems to be in a panic, some contend that the shareholders’ decision will help the airline firm increase managerial transparency. Indeed, its share price went up 2.47 percent on March 27. In comparison, the benchmark KOSPI slumped 0.15 percent.