NPS starts flexing its muscle with Hanjin Kal
Published: 01 Feb. 2019, 18:21
The move, announced Friday by the Ministry of Health and Welfare, could directly target Chairman Cho Yang-ho and the rest of the family that controls the Hanjin group, whose members have been accused of assault, misappropriation of corporate funds and illegal hiring of immigrants.
“The NPS’s fund management committee passed a proposal that if a director of Hanjin Kal is imprisoned for embezzlement or breach of duty in the operations of the parent company or its affiliates, the seat on the board will be considered vacant,” said Health Minister Park Neung-hoo.
Still, the decision will only apply to Hanjin Kal while Korean Air, the flagship airline affiliate of Hanjin, will not be affected even though the NPS is its second-largest shareholder, owning 11.56 percent. The NPS’s stake in Hanjin Kal is 7.34 percent.
The ministry explained that the NPS wants to diminish the risks associated with the Cho family’s control of the group in line with its adoption of a stewardship code last year. Though not legally binding, the stewardship code is a set of guidelines aimed at encouraging institutional investors like the NPS to execute their voting rights in a more responsible manner and engage in the creation of sustainable, long-term corporate value. The NPS also promised some guidelines for Korean Air based on the stewardship code.
Hanjin expressed concerns about the development. “We are worried the decision will restrict Hanjin Kal’s management activities,” the company said in a statement.
The NPS is not alone in taking on Hanjin. An activist fund named Korea Corporate Governance Improvement (KCGI) released a series of proposals aimed at improving Hanjin Group’s corporate governance and dwindling profits last month. It owns 10.81 percent of Hanjin Kal, the second-largest stake.
BY PARK EUN-JEE [[email protected]]
with the Korea JoongAng Daily
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