NPS opposes re-election of Korean Air’s ChoThe National Pension Service (NPS) voted Tuesday to oppose the re-election of Korean Air Chairman Cho Yang-ho as a director of the airline.
Cho’s term as a board director ended on March 17. He is looking to be re-elected at today’s annual general meeting of the country’s largest airline being held at the company’s headquarters in Seoul.
For Cho to be re-elected, two-thirds of the participating shareholders need to approve. Though the Hanjin Group owner family, including Cho and affiliates, controls 33.35 percent of the airline, it is crucial for Cho to persuade the pension fund to make sure he is re-elected, especially as many of the airline’s minority shareholders are asking Cho to step down.
The fund is the second-largest shareholder of the airline, with a 11.56 percent stake.
Consumer groups, including the People’s Solidarity for Participatory Democracy, have been arguing that Cho does not make a good candidate as he has been indicted for embezzlement and malpractice and is on trial.
Proxy advisers at home and abroad have also expressed similar concerns. The Korea Corporate Governance Service, an adviser to the NPS, has reportedly advised voting against re-election as Cho has damaged corporate value. Institutional Shareholder Services, one of largest global advisers, also expressed doubts about Cho.
At its first meeting held Monday to decide the fund’s position regarding Cho, an NPS committee adjourned without reaching a conclusion as members were unable to agree.
On Tuesday, the committee reassembled and voted to oppose Cho’s re-election.
On Friday, another hurdle awaits Cho as the shareholder meeting for Hanjin Kal, the Hanjin Group holding company, will take place. Major issues to be discussed then will be whether to re-elect company CEO Suk Tae-soo as a board member and whether to amend bylaws as requested by the NPS.
The fund proposed that when a board director is convicted of embezzlement or malpractice and is sentenced to prison, the director loses his or her position. If the proposal passes, Chairman Cho might have to resign.
BY KIM JEE-HEE [email@example.com]